Business Succession Planning
You have a successful business.
Congratulations, your hard work has paid off.
You have acquired enough wealth to provide for your retirement.
Possibly your business may grow significantly in next few years?
What now? Deciding what to do can be challenging.
If family are involved in the business and express interest in taking it over, acting soon may reduce the tax implications dramatically. Utilizing the Lifetime capital gains exemption could save Hundreds of thousands of dollars.
Maintaining control of the business and or drawing income to provide for your retirement are options that can be considered. Making certain the business does not suffer losses due to a marital breakdown, losing a key employee and or staff, can be addressed. Reviewing the plan periodically and implementing necessary changes will keep it viable.
For some of us our business is our family and maintaining some involvement is essential. The certainty to ensure your business will continue to thrive and/or provide sustenance to all involved, enhances it value.
Considering contributing to a charity that you hold near to your heart may not only provide appreciated funding albeit, significant tax relief.
Whichever decisions you make, the urgency to initiate a plan will improve the likelihood it will succeed.
Shareholder Agreements
Going into business with a partner and or multiple partners can be both exciting and daunting at the same time. Most relationships as do marriages start with the best intentions. What happens if you pass away? If you become ill? If the relationship goes south? If your marriage fails? What will happen to the operation? What happens to your shares? Having a well-structured agreement in place that is both equitable and equal to all is essential in the early stages of a business. Too many businesses have been and continue to be derailed due to the lack of a legal agreement. This holds especially true with family and friends who decided to take the plunge.
Agreements should be updated as the business grows and partners are added. Deciding what happens if a member becomes critically ill, disabled either physically or mentally and or dies is essential to the plan. Funding a Buy-Sell agreement in the most effective manner and deciding how funds are to be distributed are gravely important details. The format and wording of the agreement can significantly impact the outcome. Implementing a cross Purchase, use of a Promissory Note and or a Shareholder redemption are methods to consider. The use of an expert Advisor/Accountant/Lawyer will solidify the business plan and facilitate a harmonious transition.
