Estate Planning for an Internet Business
If you own an internet business, estate planning may encompass much more than just deciding who’s going to get your assets. Your internet business is an asset, one that can provide income for a lifetime. Will your heirs know how to run your business? Would they even know where to begin?
The best gift you can give them is to write out a detailed instruction manual listing website urls, login names and passwords, how the money is handled, how to fill orders, etc.
Think of it as a how-to manual that you would provide to a new employee. You might even include an example day, describing what you do in your business on a daily basis for marketing, creating, accounting, and so forth.
If you track your business in Quickbooks, Quicken or a similar program, your business manual should include a chapter on how to enter the items into the accounting program and how to get the information back out.
Tax time is another area you should spell out in detail. What type of business is it: Schedule C, Partnership, C-Corp or S-Corp? Do you hire a firm to do the accounting, payroll and taxes and if so, who? Where do you keep your tax records? These are important issues.
The instruction manual can be a simple word processing document with chapters or sections so that your successors can quickly put their finger on the information. Chapters might include: banking, email, payment processing, Google Adsense and Adwords, Amazon.com, eBay, advertising, websites and domains, order fulfillment, accounting, taxes, software passwords, and any other key aspects of running your business.
Banking would include where to find the checkbooks, check cards, and bank statements, as well as how to log into the bank online.
If your business has email, where is it hosted and how can they access it? Is it hosted on your own web server or website? Is it hosted with Gmail, Hotmail or another such service? Is it the generic email that comes from your internet provider?
Another very important piece of information concerns your payment processor. Do you accept payments through Paypal, Trialpay, Kagi, Google or a similar company? What is involved from start to finish when you sell something? Even the parts of an order that are automated should be described in detail, including automated email messages that get sent to the customer. Your successors will need to know how to access those automated messages.
If your website makes money with affiliate programs such as Google Adsense and Amazon.com, this should have a chapter, and so should advertising that you buy. Do you utilize Google Adwords, send out press releases, post articles and information to draw people to your website, participate in Facebook, Twitter and others? If so, all of this should be detailed, including your reasons. For example, what type of information do you post on Twitter and why?
Another area that should be separately detailed is eBay. Whole books have been written on selling through eBay and you cannot expect your successors to know the tricks of the trade unless you teach them.
If you sell advertising space on your website, understanding the finer points of dealing with advertisers is just as important as how to sell the advertising and collect the money. Handling advertisers isn’t always cut and dried. If you have dialogs with your advertisers, especially when it comes time for them to renew their ads, those dialogs should be saved for reference so that the person who takes over your business gets a feel for each advertiser and how to keep that advertiser happy.
Portions of your business that you take for granted, such as domain hosting, may be totally alien to your successor. They should have instructions that explain not only how to log into the domain renewal account and web hosting account, they should have descriptions of the htaccess file, SPF records, spam filters, auto-responders, and traffic statistics as well.
From start to finish, your successor needs to know every detail of your business; otherwise everything you’ve built might simply evaporate while they try to figure out the basic concepts.
Order fulfillment is a good example of this. If customers don’t receive their orders, the orders may start drying up. Word gets around quickly on the internet. Make sure your successor knows how and when to fill orders, handle returns, customer support and so forth. Do you fill orders once a week, once a day or every hour? This may seem trivial but for the success of your business it could be a key factor for your successors to understand.
Accounting and taxes is another area that can be hard to grasp for someone coming in. How often do you enter data into your accounting software and what type of information do you put in? What about passwords? Your successors will need a list of all of your software login names and passwords, as well as where older files are kept, including whether they are stored on your computer or in paper files.
As the instruction manual will list all of your passwords and sensitive banking information, make sure to password protect this file. For security purposes you might even consider storing the file on a computer CD or flash drive rather than on your main computer, and make sure to keep it updated to reflect changes in your business.
Regardless of how emotional your heirs might be in mourning your loss, they’ll need to take the reins of your business as quickly as possible and the best gift you can give them is a set of instructions to follow. Make sure they know that the instruction manual exists, where to find it and how to log into it. There is no better gift you can leave for your successors.