Atlanta Business Succession Planning Attorneys Assisting Entrepreneurs With Business Services and Advice
When you have dedicated your life to building or preserving a family business, it is important not to overlook a fundamental step that can help you ensure that your life’s work gets passed on to the next generation without stress or complications. Yet, many business owners tend to delay or avoid the topic of succession planning because the idea of no longer being part of the business they created is uncomfortable, to say the least. The team at Oren Ross & Associates has helped many business owners to overcome this hurdle and make a plan that not only can help secure a smooth transition but also can result in tax savings.
What is a Business Succession Plan and Why Should I Have One?
In plain language, a business succession plan is your exit plan. A succession plan prepares the business to either be 1) sold or 2) transferred into the hands of the next generation of your family or other desired heir. It outlines everything that will be needed to keep your business running after you retire and gives you a clear picture of your business valuation now and in the future.
In ideal conditions, you as the business owner would be involved in transitioning the business to a purchaser or to another family member; however, in case of sudden and unexpected incapacitation or death, the business succession plan will ensure a successor is identified (as one would have already been named in the plan) and that the proper steps will be taken to keep your business running without your involvement.
Besides securing a smooth transition, a well-built succession plan can also make it easier to foresee necessary adjustments in your organization terms in order to maximize tax advantages for you as the owner and for the next generation. Every business is unique, and no business succession plan is alike, so it’s best to consult an Estate Planning Attorney in Atlanta or a tax professional to get help making the right choices.
How Can a Succession Plan Help Me Sell the Business?
As you can see, a succession plan is a key factor to help you leave the business and transfer it to a successor. In some situations, business owners may realize that selling the business makes more sense for them. A succession plan can help you identify your business valuation and establish goals for the sale of your business. Are you more interested in maximizing the sale price or ensuring the buyer will preserve the company culture and work to protect the interests of your employees? By taking the time to build your plan, you will be able to ask important questions like the one above and prioritize your goals.
You will also need to plan for any tax consequences arising from the sale, as well as steps necessary for your business to continue operating normally during and after the sale process. These and other determinations will influence the type of buyer you will be looking for and how the sale will be structured.
Does Building a Succession Plan Result in Tax Advantages?
When it makes sense for you to keep the business in your family, your succession plan cannot only clear any confusion about who is in charge, but it can also help you achieve tax savings—both for now and for your heirs, once the business is handed down to them. An example of how entrepreneurs may achieve this is by modifying the business structure through the formation of a Family Limited Partnership (FLP) or switching your business from an S-Corp to a C-Corp.
An FLP reduces your taxable estate as a part of your assets are transferred to your heirs while you still retain control over the assets. In addition, transfers of FLP interests qualify for the annual tax gift exclusion, limiting the amount of taxes your successor relatives will need to pay. There may also be tax advantages in switching your business to a C-Corp structure, following the changes laid out in the Tax Cut and Jobs Act of 2017.
What are the Benefits?
In a nutshell, when you have a solid business succession plan in place, everyone benefits. You provide your family and your executives with a plan they can follow if you become ill or pass away, and it also helps ensure an easy transition if you decide to step down voluntarily. It can provide tax savings and safeguard the continuity of your business, while also minimizing conflict among family members. At Oren Ross & Associates, we help Atlanta business owners take the right steps to preserve their business legacy and build their succession plan without feeling overwhelmed. Contact us today at (404) 436-1752 to learn how we can help you.