How will Small Business Succession help me?
When it comes to small business succession, being proactive and having a plan for your business and family can make all the difference. At DeFreitas and Minsky LLP we understand that retirement isn’t easy, especially when your family is tied to the business. When you own the business it isn’t just a matter of not wanting to go into the office anymore. Working with family, specifically dealing with the deep-rooted relationships and obligations, complicates the transition. You have to be ready to discuss the harder topics like aging, death and financial affairs, in order to maintain control and profitability in your business.
Comfortable or not, succession planning should be a priority for any family business considering that more than seven out of ten family-owned businesses fail to survive the transition from founder to second generation.
The In’s and Out’s of Small Business Succession
There are many reasons to have a well-established plan in place ahead of time — but let’s take a look at two of the big ones:
Taxes: You don’t want to leave your family to deal with your outstanding finances. Upon an owner’s death, estate taxes may be due. These taxes are due nine months after the date of the death. The payment for these taxes is in cash, and estate taxes may include additional costs including probate, final expenses and additional fees.
Business Value: With the absence of a small business succession plan, what happens to your business in the interim may greatly harm its value. Think about an accounting company that does not have a successor. As the family of the owner tries to work through their affairs, clients are not getting the service for which they originally paid. The business your family worked so hard to build is slipping the cracks.
Developing and implementing a well-designed small business succession plan is essential to the survival of a family business from one generation to the next.
We help you with these key issues:
- Who will take ownership? Are you going to keep the business in the family? Will you sell it to a third party? We help you understand the pros and cons of each option.
- Who’s going to run the business when you’re gone? Management and ownership are not the same. You may decide to transfer management of your business to just one of your children but transfer equal shares of business ownership to all your children, whether they’re actively involved in the business or not.
- Making it fair. Transferring family ownership often adds a tremendous amount of stress to individual family members. We talk with each of the family members to ensure that they feel they a getting an equitable and fair share of the pie.
Plan for the future, know your options, and request a Free Consultation below.