Razzano is an associate with the Herzog Law Firm in Saratoga Springs.
BY BRITTINY B. RAZZANO
Excuse Number 1: Too Busy.
As a successful business owner, you may have your hand in the day-to-day operations and management of your business. It seems like there is never enough time to sit down and formulate a plan for your business when you retire or after you pass away.
You have worked hard to make your business thrive. It’s worth taking the time to ensure its continued success. If you wait too long, it will become more difficult to retire when you want to, you may get a lower price, or ultimately generate a greater tax liability. In the worst case scenario, you may pass away unexpectedly without ever formulating a plan, putting the fate of your business in jeopardy.
If you plan ahead, you will be able to clearly state your intentions and put your important business operations in writing, to act as a road map and guide for the future generation of your business.
Excuse Number 2: Loss of Control.
It is difficult to give up control of a business that you have worked so hard on. However, if you maintain sole control and refuse to delegate, the future successors of your business will never be properly trained for when the time comes for them to take over, whether that’s when you choose to retire, are forced to retire due to disability, or pass away unexpectedly.
By delegating while you are still managing the business, you can ensure that your successors will be trained under your guidance and benefit from your experience. You will also be able to instill your values and techniques to ensure the continued success of your legacy. If you choose to retire from the full-time day-to-day operations of the business, you have the opportunity to act as a consultant on a part time basis to stay involved with your business by not cutting all ties at once.
Excuse Number 3: Uncertainty of Future Successors.
It may take time to determine the best successors for your business. By procrastinating, even considering your choices, you run the risk of losing control of this choice. As mentioned above, by delegating positions, you can test out future successors to be sure that they will be a good fit, provide them with an opportunity to take time to learn the position, and ensure it is something that they want to pursue. You may want to consider instituting a mentoring program as a way to provide for a smoother transition. In some businesses, the choice for successors is clear, because there are multiple partners or because it’s a family business with many members currently involved in the business. However, family businesses are very tricky, particularly when only some of your children are involved. This is especially cumbersome when dealing with estate planning, if it is your wish to split everything equally between your heirs.
Excuse Number 4: Complex Tax Issues.
Tax issues are at the heart of all transactions and business succession plans. There are income and capital gains issues to consider, as well as gift and estate tax issues. Before entering into a transaction or considering a business succession plan, it is imperative that you consult with your attorney and accountant to ensure that you are transferring your business in the most tax-efficient way possible.
It is important to consider tax issues far in advance of any transaction, as it may take time to analyze and ultimately determine the appropriate course of action.
As always, it is important to consult with your trusted advisors, such as your attorney, your accountant, and your financial advisor, to assist you with your business succession plan. Be sure to review your plan on a regular basis to ensure that it remains in line with your goals.
Don’t gamble with the future of your business. With the proper planning, you can arrange a fruitful retirement and the continued longevity of your business long after you’re gone.