You worked hard to build your business, and you want to see the business succeed even after your work is done. There will come a time—perhaps soon or decades from now—when you are ready to retire, become incapacitated by injury or illness, or pass away.
Before that day comes, we can help you create a detailed succession plan that minimizes tax liability and prepares your business for future success.
Things to Think About When Planning a Business Succession
Our Missouri business lawyers want to create the succession plan that is right for you and your unique business. To do that, we encourage you to think about:
- Goals for your business. The first thing you need to consider is whether you want your business to continue after you are no longer involved in its day-to-day operations or to close permanently.
- Who you want to run your business. Is there a family member or an employee who can take over? Are they interested in running the business? Are they prepared to run the business, or do you need to invest in their training now? If there isn’t an interested and qualified relative or employee, do you want to sell your business to someone else?
- Creating a transition team. Whether your business goes to relatives, employees, or others, there are essential things that make your business unique and that are challenging to put on paper. Accordingly, you may consider appointing a trusted transition team to maintain continuity.
- Your financial interests. The value of your business may be an important part of your retirement plan.
- Coordinating your business succession and estate plans. You may plan to leave the business or the value of the business to your spouse, children, or grandchildren. Accordingly, it’s essential to coordinate your estate and business succession plans to account for taxes and other considerations.
We can help you consider all of these implications and develop a business succession plan that meets your goals.
Business Succession Options
Once you’ve identified your personal and business goals, you may choose to achieve these goals by:
- Selling or gifting your business to relatives. Your spouse, children, grandchildren, or other relatives may want to take over the business. You want to transfer the business by sale or gift in a way that makes the most financial sense for you, your family, and your business. You can structure the transfer to a family member in different ways to minimize taxes.
- Selling or transferring your business to employees. You may gradually transfer ownership to an employee or group of employees through stock transfer, sell the business to employees, or offer certain employees the right of first refusal when it comes time to sell your business.
- Selling your business to outsiders. If you don’t have qualified and interested relatives or employees, you may decide the best option is to sell your business to someone else. An outside sale requires a proper business valuation and negotiations to protect your financial interests. There are many ways to structure the deal that should be thoroughly discussed with your lawyer.
- Grantor retained annuity trusts. These trusts, known as GRATs, allow you to keep some or all of the business income during your lifetime. At the end of the retention period, the trust beneficiaries get the trust assets. GRATs may offer tax benefits in some situations.
- Closing your business. You may decide to stop doing business and to sell your business assets.
Each of these options deserves careful consideration as you decide what to do next.
Give Your Business a Strong Legal Foundation with Our Business Law Attorneys
Quality legal representation is an investment in the future of your business. The team at Layton & Southard serves business owners throughout Southeast Missouri and Southern Illinois from our Cape Girardeau and Perryville offices. Please contact us online or call our Cape Girardeau office directly at 573.335.3359 to schedule your initial consultation.