BLOG: Legal and Financial Issues in Sustaining Your Business

A deployment plan -- along with careful preparation, employee involvement and training, arranging from good financial management, and trust in the persons running your business -- are the tools you will need to successfully to sustain your business during long-term absences.  In this post we will discuss some of the legal and financial considerations for sustaining your business; however, you should also work with your legal and financial advisors to ensure that your plan complies with all laws and regulations.

Legal & Financial Issues

If you choose to sustain your business, it is critical that your business is protected legally while you are deployed. The following is a list of legal issues you will need to discuss with an attorney and financial advisor as you build and implement your deployment plan:

  • Identify the responsibilities and capacities of your legal advisors during your absence. For example, will your attorney handle all unfinished business and problems that arise after your departure, or will you retain an employee to handle claims and other issues?
  • Appoint someone you completely trust to serve as your power of attorney should it become necessary.

    There are different kinds of powers of attorney: a special or limited power of attorney has a very specific purpose; a general power of attorney has a much broader definition and can act on your behalf in various situations. You may consider naming the person running your business in your absence as your power of attorney because he or she will need to make business decisions on your behalf. Regardless of who you choose, don’t actually sign over the power of attorney until it becomes absolutely necessary.

  • Make arrangements in the event of your death or disability. This will include drawing up a possible succession plan for your business, but also ensuring that your life insurance policy is adequate. You should also consider taking out disability insurance in case of a disability that prevents you from returning to your business.
  • Make sure your business is covered by adequate liability insurance to protect it from lawsuits and other issues that may arise while you are deployed.

It is important that you update and analyze your business cash flow statements as you build your deployment plan. You will need to determine what the monthly costs of doing business are and the minimum revenue you will need to bring in monthly to keep your business afloat. In addition, you will want to meet with your accountant or other financial advisor to make sure your taxes will be taken care of in addition to all other financial needs. Below is a list of financial issues you will need to discuss as you build and implement your deployment plan:

  • Collect financial statements and prepare paperwork for your accountant so he/she can prepare your income taxes. If your business continues to operate during your deployment, the IRS does not allow any extensions or relief from filing your income taxes.
  • Notify creditors and lenders (see Sample letters below) of departure and request reduced interest rates if applicable. Pursuant to the Service members Civil Relief Act, you may be eligible to receive a cap of six percent interest on debt acquired before being called to active duty if you can show that military service has materially affected your ability to pay back your debt. Find out more about the SCRA at
  • Secure credit line or provide cash reserve to the person who will be running your business while you are gone. This will help protect them if any unforeseen circumstances arise that are not covered by insurance and are beyond the limit of the businesses cash flow.

If you need more help, the SBA, IRS, and JAG are all valuable legal and financial resources you can turn to for online assistance and information.

Notifying Creditors Sample Letter

An important step and one that could easily be forgotten is to notify creditors of your upcoming deployment. Here is a sample letter that you can use as a template:

Sample Letter

XYZ Company LLC
111 Robin Lane
Anytown, MI 22222

August 1, 2005

ABC Credit Corporation
5 Industrial Road
Birmingham, AL 11111

Dear Sir or Madam:

I am writing to inform you that I will soon be serving our country as a member of the U.S. Army in Operation Iraqi Freedom. I am scheduled to deploy on Sept. 15, 2005, and expect to be in Iraq for at least one year.

I plan to maintain my business operations while I am overseas. Although I am leaving my business in capable hands, times may be tough in my absence. I am requesting an interest rate reduction on my business loan under the provisions of the Servicemembers Civil Relief Act. It is my understanding that under this law, my interest rate will be capped at 6%.

If your company offers programs for small business owners who are also members of the Armed Forces, I would like to learn more about them. Thank you for your consideration.


Bob Soldier
Owner and President

Press Release Sample Letter

You may also want to consider issuing a press release to help notify your customers.  Here is a sample “News Release”:

Sample Press Release


For more information contact: Joe Marine
Public Relations for XYZ Company
Phone: 555-555-6654—Fax: 555-555-6673


XYZ Company to Sustain Operations during Bob Soldier’s Deployment

August 1, 2010 -- XYZ Company president and founder, Bob Soldier, has been called to serve as a member of the U.S. Army in Operation Iraqi Freedom. During Soldier's planned absence, he leaves his business in the capable hands of John Airman and Donna Coastie.

Soldier, who is scheduled to deploy Sept. 15, 2010, has planned a special sale on XYZ Company's popular wireless networking products from Aug. 15, 2010 through Sept. 14, 2010. During the sale, Soldier, Airman, and Coastie will be available to answer questions.

XYZ Company's biggest seller is its dual band PC networking card. Many of the IT managers at the companies who have already purchased the networking card have reported that the product has helped their companies run more efficiently under the current wireless standard. "My company has been very pleased with XYZ's dual band PC card, because it provides our staff with complete connectivity and compatibility. It helps us save time and money," commented GI Joe, president of MLA Technologies.

During the sale, XYZ Company will offer the dual-band PC networking card and other fine products at substantially reduced prices. “With a five-year warranty and 24-hour technical support backing up our products, our customers can't go wrong. On a personal note, I look forward to meeting the people who do business with us," commented Soldier.

For those who can't make it to XYZ Company's store for the sale, Soldier emphasized, "We'd love to have people come see us in person at the sale, but if that’s not possible, our products are available online through our Web site, as well as through independent IT retailers, catalogues, and through e-commerce sites."

About XYZ Company
Founded in 1987 by Bob Soldier and his wife, Jane, XYZ Company is located in Reston, Texas. Over the past 17 years, XYZ Company has produced products for the growing IT needs of corporate businesses. XYZ Company recently won IT Magazine's Best Manufacturer Award and has been listed by Tech Magazine as one of the top 100 fastest-growing IT companies in the United States. For more information about XYZ Company and its services, please visit the company's web site at


In the next part of our series we will cover the employee and security plan for sustaining your business.


The Veterans Corporation (2007)

Virginia SBDC