You have worked hard to build your business. When it is time to step aside and allow the next generation to take over, you want to carefully tailor your exit to fit your business and its needs. At Schneiders & Associates, LLP, our business succession planning lawyers want to help you. We will work closely with you to understand the challenges you face and the goals you want to achieve. When you hire an attorney from our firm, you will receive the trustworthy guidance you need as you contemplate and plan a smooth transition of leadership for your business.
Why Do You Need a Business Succession Plan?
When you are ready to move on to the next phase of your life, you have options regarding what to do with your business. You could sell it or dissolve the company and sell the assets. However, if you wish to remain involved in the business or pass the baton to another family member, it is crucial to have a plan in place.
Important reasons to have a business succession plan include providing for:
- Time to train your replacement and transition to new leadership
- Time for your clients to meet and adjust to new principals
- The opportunity to settle any issues within the company or family
Further, if you unexpectedly die or become incapacitated and cannot run the business, it is crucial to have a plan in place for those taking over. As part of your plan, one of our estate planning attorneys can work closely with your business succession lawyer to coordinate and design a succession timeline that works best for you. Not only does a plan ensure the smooth transition of ownership and management and minimize taxes, but it also prevents harmful and potentially costly disruptions to the business. By taking the time to develop a succession plan in conjunction with your estate plan, you are laying the groundwork for the future of the business.
What Businesses Benefit From a Succession Plan?
While any company can benefit from a successful plan, closely held businesses clearly reap great benefits from having strong business succession plans because of their small size. In California, each business structure may face specific tax implications and legal requirements that must be addressed. Whether a sole proprietorship, Limited Liability Company (LLC), or partnership, by establishing a clear and concise plan (before you need it), you can make the transition easier for those who are responsible for carrying the business forward after you leave.
At Schneiders & Associates, LLP, we have extensive experience helping all types of businesses create succession plans that are as unique as each individual business. If you are concerned about the future stability and client retention of your business, you should consider creating a succession plan for your business.
What Can You Expect For Your Succession Plan?
Our skilled and knowledgeable attorneys will carefully craft a succession plan to accommodate the needs and goals of your business. However, the following are some important components of every succession plan:
- Identifying a successor – Choosing the best candidate to replace you can be difficult. While you may have always intended to have a child or other family member follow in your footsteps and take over the business, this may not be the best thing for the company. As an objective third party, your attorney can help you select a well-qualified successor.
- Establishing a transition timetable – Determining your exit date allows new leadership and existing clients to meet while you are still active in the business.
- Determining the ownership and governance structure – In a family business, you may want several children to share the benefits. Accordingly, ownership rights and decision-making authority going forward must be clearly articulated in the plan.
- Developing a strong strategic plan – A robust strategic plan is essential to providing anyone entering the business with the roadmap they need to continue successfully running the company. It should also provide them with the organization’s short- and long-term goals.
- Structuring a financial plan – A complete valuation of the business should be made for the benefit of the incoming owners and yourself. You may prefer to receive a regular income during retirement instead of a lump sum payment. The financial transaction to transfer the business can be complicated, so it is best to plan ahead with the help of a business succession attorney and financial experts.
What Challenges Can You Encounter In Succession Planning?
Business succession planning can be challenging, especially with a family business. Working with an experienced business succession attorney who can help you with the obstacles you may encounter when establishing your plan is crucial. Your attorney may assist you with:
- Family dynamics
- Tax issues, particularly when transferring ownership within a family, can lead to significant tax liabilities. California’s unique tax system adds complexity, as the state does not impose an estate tax, but federal estate and gift tax obligations may still apply.
- Conflicting family goals, where family members have different visions for the future of the business
- The impact of California’s community property laws on business ownership in the event of a divorce
At Schneiders & Associates, LLP, our attorneys are well-equipped to assist with all aspects of your business succession planning needs, regardless of the challenges you may encounter.
Can I Modify My Succession Plan?
If you establish a business succession plan now, you can adjust it as needed with the assistance of your attorney. You can make changes in response to certain life-altering events, including:
- The death or incapacity of a principal
- The unavailability of the successor
- A principal’s divorce
You may also wish to adjust the future ownership structure based on life events affecting your heirs and potential principals of the company, such as death or marriage.
Contact Schneiders & Associates, LLP Today
If you are a business owner who wants to plan for the success of your company and the financial security of your family after you leave your business, an attorney at Schneiders & Associates, LLP can help. We are ready to assist you and your business in developing the comprehensive plan you need. We offer our clients the personal attention they deserve, especially as they look forward to the future. Call us today to get started.