Creating a business succession plan is essential if you own a business. Many family-owned and small businesses do not have a business succession plan in place, which can be incredibly detrimental in the long run. Without a business succession plan in place, you may not be able to obtain the highest value should you sell your business. You may also have little control of the timing of your exit strategy. If you have a family business, creating a business succession plan can help you avoid any issues of unfairness between your adult children or family members. Ultimately, a business succession or exit plan will assist in preventing business transfers that cause uncertainty and instability.
What Will Happen to Your Business After You are Gone?Many small business owners work extremely hard to keep their business profitable. For many business owners, their employees would not know how to run their business without them. Would your managers and employees be able to keep running your business if you became incapacitated or passed away? Would your spouse need to use personal assets to pay business debts if you passed away? Creating a business succession plan is extremely important because it will work to protect your loved ones and your business from these types of situations.
What are the Benefits of Engaging in Succession Planning?Many different benefits come with business succession planning. When you and your lawyer put together a well-designed business succession plan, you can plan to achieve the following:
When you meet with a business succession lawyer, he or she will start by getting an understanding of your business and your goals. Next, your lawyer will ask some important questions to create the best possible business succession plan. First, you will need to consider who you will choose to be the successor of your business should you become incapacitated or pass away. Is your business successor prepared and willing to take on the responsibility and become accountable for managing your business?
The person you appoint as the successor of your business may also run your business on a day-to-day basis. If not, you will need to make sure the future owner has a team of managers who have the knowledge and experience to make daily operational decisions for your company’s betterment.
Next, you will need to decide how the transfer of your business will take place. Imagine that you become incapacitated and unable to make any decisions regarding your business. What would you like to see in terms of a transition to another owner or manager? Which employees will need to handle daily tasks? How will your employees get all of the information they need to act accordingly?
If you plan on selling your business, your lawyer can help you decide how much money you should receive for your company. The timing of the sale is crucial, as well. When and how will you receive payment for your stake in the company?
Minimizing Tax LiabilityOne key benefit of engaging in estate planning is minimizing your tax liability. Your lawyer will be able to provide you with different strategies for saving money when it comes to your taxes. Your lawyer will be able to determine the consequences of your business succession plan and help your shareholders, customers, and team reach success after you are gone.
Contact Our Lawyers TodayAt Arnold & Smith, PLLC, we will work to help you engage in effective business succession planning. We will help you negotiate the terms of your business’s sale if you decide to sell your business and we will also help you ensure that your family members and the business itself have the cash needed to make an effective transition of power. We will also work with you to update preexisting plans when circumstances change. The sooner you talk to a lawyer about your business succession plan, the better. Contact the Charlotte, Mooresville, and Monroe estate planning lawyers at Arnold & Smith, PLLC, to schedule your initial consultation.