Exiting Your Business Through a Family Transfer.
There will come a time when you will need or want to exit your business. There are many ways to do this, each with its pros and cons. One common way is through a family business transfer. In this way you can stay connected to the business and keep the business in the family; however, this kind of transfer may result in your getting less money for your business and it may take longer to complete.
A properly structured transfer can mean that you will receive the income you want and need by the end of the process. Your exit can be structured so you retain control of your business during the transfer period and until you receive the money agreed upon. This benefit can be realized through continued involvement, participation in profits, and/or sale of the business. To gain this financial security the business must be transferred to family who can and will run the business properly.
A family transfer of your business can be designed, if you wish, to take 5-10 years. This can allow you to gradually transition for life after the transfer. The time can be used to ready the business and the future owners for a successful transition. During an extended transition you can also collect income from salary, perks, and distributions. Keep in mind, if you want to exit your business within a year, it typically takes children several more years to pay for a company than a sale to a party outside the family.
Tax planning is important in mapping out the transfer of your business. You can minimize your taxes with a careful strategy. Take into account and balance income tax, capital gains tax, and estate and gift tax. Be careful to not pay a lot more in taxes than necessary.
Family transfers of one's business can address goals that more traditional business sales can't. These transfers can help to take care of future generations in the family. Family values can be left intact. The role of the business can be kept in the community. For these goals to be realized, it is important that they are in line with those of your family.
Planning your business exit is vital. The planning is important for relationships and a good financial outcome. Determine if an eventual family transfer makes sense for you and your business. Strategize with Shoffner & Associates to assess your best business exit and outcome.
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Freya Allen Shoffner, Esq.
Shoffner & Associates
Counselors to Small Business and Families.
Give Freya a call at (617) 369-0111 TEXT US (857) 524-3422 or email email@example.com