Two Sacramento-area family businesses have recently joined the Family Business Association of California to support efforts to keep family businesses thriving despite tax and regulatory obstacles.
OneSource Stop Loss is a second-generation family business based in Elk Grove with an office in Irvine that provides insurance and consulting services for self-funded health plans. It is one of the largest wholesalers of medical stop loss in the nation.
And Rocklin-based Switzer Associates Leadership Solutions provides coaching, team building, and facilitating for family businesses, with the goal of helping leaders reach new heights in performance.
“Family businesses are the backbone of our state’s and our nation’s economy,” said FBA Executive Director Robert Rivinius. “Nationwide, they generate 57 percent of the nation’s GDP, employ 63 percent of the workforce and create 75 percent of all new jobs. In California they employ 7 million people.”
In addition, he noted that studies have found that family businesses tend to pay their employees better, train them better and provide more generous benefits than nonfamily companies. And because families are in it for the long term, he said they focus on not just the next fiscal quarter but the next quarter-century.
“Unfortunately, only about 30 percent of family businesses survive into the second generation, 12 percent to the third and just 3 percent to the fourth generation and beyond,” Rivinius said. “And policies being proposed and enacted in Sacramento and Washington, D.C., make it harder and harder for family businesses to remain family-owned. FBA was formed to be an advocate for family businesses and we’re extremely pleased that these two companies have joined.”
For 2017, FBA has adopted an aggressive advocacy program that includes accelerating work on eliminating regulations and preventing onerous new ones; continuing to explore opportunities to expedite the transfer of ownership and property between family members and through successive generations; fight against attempts to raise taxes on family-owned and commercial properties; and opposing proposals and legislation that would add new regulations, costs and complexity for family businesses.
As an example of the obstacles family businesses face, legislation was recently introduced that would create a new California estate tax to replace the federal tax being considered for elimination. Estate taxes are one of the biggest obstacles in allowing businesses to remain family-owned from one generation to the next.