Strategic succession planning for your business
Establishing a business succession plan should be part of any long-term business goals. It should definitely be a priority in a family run company when you consider the fact that seven out of ten family-owned businesses don’t survive the transition from the original founder of the company to its second generation.
To ensure the continued survival of a family run company from one generation to the next, there are some important factors to take into consideration when developing and implementing a business succession plan:
- Passing the business on to a family member or members vs. selling it to a third party
- Management vs ownership of the company
- Minimizing tax liabilities
- Equitable treatment of family members
While many business owners make the choice to sell their business when they make the decision to retire, others want the business that they’ve created and successfully run throughout the years to continue after they’re no longer involved in its operation. Therefore, it’s beneficial to take the time and effort to create a succession plan that will ensure a smooth and equitable transition.
A plan that works for you and your successors
If you own a business, a succession plan should be part of your overall retirement planning. A sound succession plan should focus on key issues including:
- Business valuation
- Business restructuring
- Tax forecasting
- Tax liabilities
- Financial projections for retirement
A valuation of your business can be either done through an appraisal by a CPA or by an arbitrary agreement between all the partners involved. If a part of your company consists only of publicly traded stock shares, then valuation will be determined by the current market value of the stock.
Putting the succession plan in place
Business succession planning, especially for a family business, requires careful preparation. The dynamics within a family can complicate the transition, creating resentment and bad feelings among family members.
Therefore, it’s important to engage the services of a CPA or business consultant with experience in business succession planning. GYL offers a full range of CPA services for businesses in San Diego. We provide a full range of accounting, audit, business advisory, and tax services for businesses.
Our team of experts has years of accounting and business experience with the goal of providing our clients with the highest level of service possible. We’ll help to prepare a transition plan to ensure that you have a successful exit from your business upon your retirement. At GYL we feel that the best approach in business as well as in life is to “begin with the end in mind”.
Contact us today to schedule a free consultation with one of our partners.