Instead of simply wondering when the best time would be for you to retire, or even contemplating a career switch, you have the additional responsibility of making decisions that will impact other members of your family. A family business can be a joy, but making transitions and decisions is a complex process that involves both finances and emotions. Important decisions need to be made and discussions need to take place, but people are often uncomfortable discussing topics such as succession, aging, and death. Even financial situations can be uncomfortable when family relationships are involved.
Iron Bull Tax Pros understands the discomfort of discussing the future of a family business, but we also know that it is an important step that must be prioritized in order to make sure that a business survives, or that everybody is in agreement as to its disposition. Statistically speaking, 70 percent of family businesses do not succeed once it passes from the founding generation to the next, and this is often the result of lack of planning. Having a succession plan in place is good business sense, and is the best way to ensure that a family business will survive the transition from one generation to the next with a minimum of discord and with an asset-preserving strategy for managing tax issues.
When addressing issues of succession, there are a number of questions that need to be asked. First and foremost is whether or not the business will remain in the family or whether it should be sold to a third party. There are advantages and disadvantages to both that need to be discussed. Beyond ownership is the question of management, as a family can retain its position of owner but transfer management responsibility to an outsider, or to one or more but not all family members. These decisions can be emotional and contentious, but we approach them by having conversations with everybody involved in order to understand each person’s interest.
In addition to working to make all decisions as fair as possible and keeping things as stress free as possible, our succession planning service includes devising strategies that minimize the tax burden that will be faced in transitioning your family business. When ownership is transferred there is usually a significant tax hit, which can be difficult to manage in the face of a family business not being a liquid asset. We will help you find a way to minimize the tax impact.
Succession planning requires special attention to unique details, and it is only once answers about family dynamics and priorities are answered that standard financial questions can be addressed. Once everybody has weighed in on the key issues, we will be able to provide you with traditional financial services, including retirement projections, tax projections, business restructuring plans and business valuations.