Many business owners try to plan for everything in their business. However, they often forget to plan for a very important thing: What will happen to their business when they can no longer run it? This item can be critical because a lack of a succession plan for your business in North Carolina means planning to let state law determine everything for you.
At the Thornton Law Firm, we suggest creating an estate plan with elements that include succession plans for the business. There are many things that business owners need to think through.
4 things that business owners don’t often think about when planning for business succession is:
- Successor Plans: There are so many ways to hand a business off after passing away. Determining who will take over the business isn’t the only decision that needs to be made. How they take over the business needs to be considered as well.
- Minimizing Taxes: How can estate taxes impact a business? There are many processes that can be used to minimize tax payments for individuals taking over the business.
- Assets: If the business has non-liquid assets, how will the new owner get access to those assets? There are agreement and insurance policies that need be set up to allow for the passing of assets between owners.
- Type of Business: How a business is initially set up can impact how a business can carry on at death. For example, a sole proprietorship is not usually seen as being separate from the individual. On the other hand, partnerships and LLCs often have complex agreements that spell out how heirs can take ownership of their shares in a business and whether they can take an active part in running the business. Different business entities may call for different solutions.
There are so many what-ifs and decisions that are specific to an individual business. There are also many ways that not having a succession plan for a business can be detrimental. If you want the business to live on past you, it’s time to chat about your plan.