Family owned businesses are central to our economy, making up 90% of U.S. businesses. Yet less than half will survive to a second generation and fewer still will make it to a third. We are here to help beat those statistics.
A business succession plan is crucial if you want to preserve your hard-earned business legacy, protect your family and reduce potential estate taxes. It can be used to lay the foundation for the sale of your business interest and help establish the value of your business.
Additionally, it can help:
• Establish who would run the business if you retire or pass away
• Set policies for distribution of business stock and other assets
• Pay estate taxes without sacrificing the business or causing an undue burden on the business
• Provide a way to take advantage of unexpected expansion opportunities
Business owners are typically so busy with day-to-day challenges that they often have little time to think about who will take over the business once they’re gone. We take the time to establish simple guidelines to make succession planning less stressful.
Clearly establish your objectives – what you want the plan to accomplish.
Communicate your vision with your family, business owner associates and key employees.
Honest and ongoing communication is essential to preventing surprises and helping to manage conflicts that could disrupt your business.
The key is to resolve them early on to preserve your family and the ongoing success of your business.
Your plan should be flexible, since business, family and health situations can change at any moment.
Make sure that, regardless of what may arise, your business is structured to handle unexpected changes and opportunities.
Create “what if” scenarios with those who are important to the business, including qualified legal and financial professionals.
You may have a choice of equally qualified children or employees. If more than one child is involved in the business, you’ll need to decide who gets to be boss and who gets voting interests in the entity.
The secret is to make your decisions in a way that will allow your business to survive, your employees to stay happy and ideally, your family to remain at peace.
It’s difficult for any business owner to let go. But getting the next generation ready to lead is one of the most critical ways to protect your business’ future. Once you’ve done that, you’re ready for the financial aspect.
From business valuation all the way to estate and gift taxes, there are plenty of ways to leave your business to your successor without incurring high taxes from the IRS.
A business succession professional can help you determine which of these strategies could be right for you.