For most entrepreneurs, planning for the continuity of the enterprise is the ultimate management challenge. All business owners will one day decide to sell their business or transfer ownership to a family member. If you don’t lay out plans for the eventuality, the IRS and the courts will make it for you as your family members sit helplessly by and watch your life’s work disintegrate.
The first step is to sit down with your family members and vital senior employees and determine where you want the business to go over the next 20 years. Think strategically about what steps you’ll have to take to get there. Then, decide what you can do for yourself and where you’ll need professional help planning and executing your moves.
You will need to assemble a team of professionals that you trust. Attorneys, financial advisors, and CPAs should indeed be represented.
Here are some items your CPA can assist you with:
1. You will need a business valuation. This should be done periodically to reflect your enterprise’s current value.
2. Structure the agreement and decide how you should be paid.
3. Develop strategies that maximize your tax advantages and help you to reach your financial objectives.
4. Coordinate your business succession plan into your overall estate plan to ensure compatibility and tax savings.
5. Recommending insurance products to protect your investment and pay for possible tax liabilities in the transfer of ownership.
6. Outlining investment options and opportunities to maximize tax savings and protect your financial security after retirement.
For assistance with your business succession plan or estate plan, call your LSL CPAs at 714.569.1000 or contact us through the website.
