What Is Business Succession Planning — and Why Is It Important?
If you own a business, you spend most (or all) of your time running the business. Do you ever consider what would happen to your business without you? You probably don’t — but you really need to consider that possibility. Business succession planning is the best way to plan for unexpected events that can dramatically affect your business.
You invest your heart and soul in your business — and you need to protect that investment. By putting a plan in place for what happens if you cannot run your business for the short- or long-term, you protect your business. You also protect yourself, your family and their future, and your finances against ownership and control issues that could occur in the event of an unexpected illness or accident.
Helping our clients with business succession planning is an important aspect of our business law and estate planning practice at Peterson Law Offices, PLLC. Located in Queen Creek, we proudly serve clients throughout the East Valley.
Key Considerations in Business Succession Planning
Business succession planning addresses what happens to your business if you cannot run it because of temporary incapacity, disability, or death. It also addresses what happens if you retire or decide you no longer want to run the business. Several critical considerations factor into developing the plan, including:
- Who will manage and run the company if you cannot? Will it be a family member, a partner, or someone else?
- When you are no longer able to run the business, who will own the company? Will it stay in your family or be sold to someone else?
- What is the best way to structure a transfer of ownership (including within the family) from a tax liability standpoint?
- How will valuation of the business be determined?
- Will your business be part of your estate or subject to probate and taxes?
These are just some of the primary considerations that we take into account in assisting clients with a business succession plan.
Estate Planning and Business Succession Planning
Business succession planning and estate planning share many of the same goals, including preserving assets and protecting your family. Business succession planning often includes structuring your estate plan to protect your business assets and minimize the tax consequences of transferring your business after your death.
Just as an estate plan is unique to each individual, a business succession plan takes into account all the special circumstances of the individual business and the owner. The nature and structure of the business, financial position of the business, and needs and goals of the business owner all factor into creating the right plan.
Your Business Succession Plan
If you own a family business, you may want to make sure the business stays in your family if you can no longer run it. In that case, you need to choose and designate a successor to run the company. You also need to address ownership structure if there is a change in management.
If the plan provides for your business staying in the family, your business succession plan sets the stage to make sure that your eventual successor is thoroughly knowledgeable in everything required to run your business. Part of your business succession plan may even include a gradual transfer of specific responsibilities or a training plan to prepare your successor.
When we assist you with establishing a business succession plan for your family-owned business, we discuss and address any potential conflicts and issues that may arise in your family. Resolving those potential problems in advance avoids disagreements among your family members.
If you prefer to sell your business in the event you can no longer run it, your business succession plan establishes protocols for how the sale and transfer occurs. The plan also addresses distribution of the proceeds of a sale. Tax strategies are important in determining both of those aspects of the plan.
Attorney Shane Peterson uses his extensive business experience and legal skill to assist clients in all aspects of their business operations and personal financial circumstances. Business succession planning utilizes specific tools and strategies to develop the plan. The plan may include:
- A will or trust
- Setting up a Family Limited Partnership or Limited Liability Company
- Drafting and negotiating a Buy-Sell Agreement for a multiple-owner company
- Tax planning and asset protection strategies
- Business dissolution and exit strategies
- Business restructuring in conjunction with succession or a transfer of ownership
Our Approach to Business Succession Planning
We approach business succession planning with the same individualized, client-focused approach that characterizes all our services. We learn all aspects of your business, your personal and business financial circumstances, and your family situation before we recommend the right plan for you. Throughout the planning process, we maintain our commitment to providing top-quality, affordable legal services.
Developing your plan includes working closely with you to identify your important short- and long-term needs and goals. The process also involves exploring available options and evaluating solutions to potential issues that may arise.
If you are a client who uses our business law services, creating a business succession plan is a logical extension of the assistance we provide with your on-going operations. A thorough, sound plan protects your business and your family against unanticipated events that could adversely affect your business.
Schedule a Free Consultation to Talk with an Experienced East Valley Estate Planning Attorney
At Peterson Law Offices, we provide high-quality estate planning services at affordable prices. We welcome inquiries from clients throughout the East Valley, including Queen Creek, San Tan Valley, Gilbert, Mesa, and Chandler. Schedule your free initial consultation by calling 480-878-5998 or using our online contact form.