Vrakas CPAs, Here Are Your Articles for Wednesday, September 07, 2016
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Deciding Who Will Take Over the Family Business

 

More than half of all small-business owners are 50 or older, according to the U.S. Small Business Administration, and many of them are starting to think about retirement. 

Quite a number of them would prefer that one or more of their children take over, but that's not necessarily how the children see it. If this is the case, the owner might think about selling to an employee who has proven to be trustworthy, committed to and passionate about the business. And if neither of these scenarios is likely, they'll need to prepare the business, as well as their employees and their clients, for an impending sale.

The best-case scenario is for the retiring owner to be assured financial independence while positioning the business for continued prosperity under the leadership of the new generation. Forbes offers these five steps for success:

  1. Establish a series of goals and objectives: This should be done at the very beginning, and both the retiring owner and new leadership should be kept in mind.
  2. Establish a decision-making process: Be sure to include a method for handling disputes, just in case.
  3. Establish the actual succession plan: This should include not just the new owner, but the new managers and all substantial transition support for the new owner.
  4. Create a business and owner estate plan: Keep in mind the taxation implications to both the new and retiring owners and the business upon the sale or transfer of ownership, death or divorce.
  5. Create a transition plan: Among other things, establish a timeline for the implementation of the succession plan.

 

Since the business owner needs to focus on maintaining profitability, an objective team of trusted advisors including a business attorney, bank and accounting firm can assist in navigating a succession plan. Vrakas CPAs + Advisors brings over 45 years of experience assisting closely held businesses through this transition period. Contact us at (262) 797-0400 for a confidential conversation. We can help with all the details to make it a smooth and successful succession, and one that spells happiness for all concerned.

 
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Our firm provides the information in this e-newsletter for general guidance only, and does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation. Tax articles in this e-newsletter are not intended to be used, and cannot be used by any taxpayer, for the purpose of avoiding accuracy-related penalties that may be imposed on the taxpayer. The information is provided "as is," with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose.
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