Business Succession Planning: Oklahoma Family Business Guide
Business succession planning is crucial for both family business owners and small business owners who want to see the business continue. By developing a business succession plan as part of the estate planning process, a business owner can ensure that someone can continue to run the business in the future, and that key employees may be able to remain with the business.
In this blog post, business owners will learn more about:
- Business succession planning for both a family business and a small business.
- Whether a business owner should have an exit strategy in place.
- The truth about family business succession and how it could affect family members.
- How small business succession positively impacts the economy by keeping key employees employed.
- Whether business owners should seek legal advice about tax and business matters related to estate planning.
If you're a business owner in Fort Collins or the surrounding area and have questions about business succession planning, schedule your free consultation with Ball Morse Lowe now.
Business Succession Planning for the Family Business
Business succession planning for the family business is an important estate planning topic. Not only does the business have value, but as a business owner, you must consider and answer several key questions:
- Do you have a family member in mind who wants to run the business?
- Will you be able to accept the fact that this person may want to run the business differently or may have different goals for it?
- Can you accept that the family member or members chosen by you to be the new business owners will be able to enter into buy-sell agreements or dissolve the closely held business in the future? The possibility of selling the business is often a difficult reality for business owners to accept.
Family Business Succession Could Cause Disputes Among Family Members
Like in other estate planning matters, family business succession has the potential to cause disputes among family members. This could happen for any number of reasons and, sometimes, for what may seem like no reason.
You may be able to minimize or eliminate certain potential disputes by talking with family members about who will run the business in the future. This can include talking with family members about who is and isn't interested in being involved in the family business, the future goals of the family business, and any other issues related to the small business that you believe may be relevant.
This conversation may need to occur more than once, since your goals may change both for your small business and for your life. As your goals change, your estate planning needs may also change. The desires and opinions of your family members may also change. In addition to their desires and opinions on whether they wish to run the business, you may also change your mind on whether you wish for them to be involved as future business owners.
Should You Have an Exit Strategy for Your Small Business or Family Business?
As a business owner, you spent your time, resources, and energy building your small business or family business. Now, as you prepare your estate plan and prepare to pass it on, there is another key question to address. Should you have an exit strategy?
The answer to whether you should have an exit strategy is, of course, up to you. Do you want to enter into a buy-sell agreement to take the value of your business and invest it or use the money as a nest egg? Do you want to exit the business as your chosen successor takes over, so that you are still available to answer questions? Do you want to exit the business so that you can move on to your next adventure and spend time with your family? Maybe you're just interested in selling the business and doing something new.
If you decide that you want or need an exit strategy, you need to know the value of your business, the process of selling the business, how to understand buy sell agreements, and how tax and business go hand in hand (especially since what you net for your business could affect your estate planning).
Small Business Succession Planning: Keeping Key Employees Employed
Small businesses as well as family businesses are often successful not just because of their business owners but also because of the dedication of key employees. Closely held businesses simply could not succeed without them. With proper business succession planning, your small business or family business will remain operational. Key employees will remain employed.
According to the SBA, small businesses provide 64% of all new jobs. By keeping your key employees through proper business succession planning, you help improve the economy while also helping your clients enjoy the service or goods they've grown to appreciate from your business. You also help improve the likelihood that your small business will continue to be successful since your key employees understand the ins and outs of your business operation.
Tax and Business: Is Legal Advice Necessary?
When it comes to tax and business, legal advice is often necessary for business owners. Buy and sell agreements as well as completing the necessary tax returns often require the experienced guidance of an attorney as well as a tax expert.
Additionally, because we are discussing business succession - which is part of the estate planning process - estate tax may, in some rare instances, be a concern. The federal estate tax exemption for 2021 is $11.7 million. Therefore, most business owners involved in business succession planning won't qualify for the estate tax.
However, because of potential family member matters in the future, such as determination of heirship hearings involving allegations of assets that were not properly distributed as well as other estate planning, business succession planning, and tax matters, legal advice and representation are very beneficial for business owners.
Estate Planning for Business Owners: Free Consultation
Business succession planning can involve several challenges and concerns, but it is an important estate planning step for business owners. To learn more about business succession and estate planning, schedule a free consultation with Ball Morse Lowe now.