For many, estate planning includes the basics of trusts, wills, powers of attorney, etc. But when you are a business owner, it only makes sense that you take additional steps to ensure your business ends up in the right hands.
At Clark Olson Law, we know there are many considerations you must take for your business succession plans. We will work with you to ensure that your business ends up with the proper ownership before or after your death, consider all tax implications, and establish plans to make sure your family is taken care of.
What is business succession planning?
Business succession planning is part of the estate planning process which handles the logistical and financial decisions pertaining to who will take over the business upon retirement, disability, or death.
Most business owners begin the business succession planning process by naming the ideal successor to the business. This may be an heir, business partner, or co-owner. Whoever it will be, you need to ensure all documents and plans are established well ahead of time.
The Business Succession Planning Timeline
Knowing who you want to take over the business is the main component of your business succession planning timeline. But being able to provide that individual and any business players a detailed list of dates and times, or circumstances, will be critical to the future success of the business.
Once you have gone through the process of determining who the successor(s) will be, you should:
- Put together a formalized standard of operation. This will include financial documents, company procedures and protocol, employee handbooks, and training manuals.
- How the succession will be funded. This may include life insurance policies, seller’s note, etc.
While these timelines are often formalized for retirement purposes, it can become important to have them ahead of time to prepare for any emergency situations such as a health crisis, or even death.
Why do I need a business succession plan?
A business succession plan isn’t just important for you, the current owner. It can also impact future ownership and current employees. For example, if the successor is not familiar with day-to-day operations, that can lead to long term issues for employees later on. Issues with human resources, payroll, and even leadership structure from the top down can be impacted.
And not only will issues like this impact employees, but it will also impact ongoing client relationships. Ensuring that long-term contracts, repeat customers, etc. are taken care of in the same way they had been under your leadership will be critical to a smooth transition.
Common Succession Plans
Every business has unique needs. But there are common business succession plans that you can select from to give your successor a proper start.
- Selling to a co-owner
- Passing the business to an heir
- Selling the business to a critical employee
- Selling the business to an outside party
- Selling your shares of the business back into the company
What is important to know is that every business structure is different, just as the longevity and goals of a company are.
If you are unsure of the business succession plan that is appropriate for your business, you need legal advice. You need Clark Olson Law.
Business Succession Planning With Clark Olson Law
When it comes to planning for the future of your business, knowing the succession plan that will be more beneficial and lucrative to the company as a whole is key. At Clark Olson Law, we will work with you to establish tax benefits, company formation, and the goals you have for the future successor of your company. Contact our business succession planning attorneys at Clark Olson Law today.