You’ve spent years building up your business, but have you given any thought to what will happen when you want to slow down a bit or when you die?
Succession planning is about having an exit plan. If you have one of these in place you can sit back and focus on your business knowing that whatever occurs in the future, there are plans in place to take care of things.
What do you want to happen?
First of all, you need to think about what you want to happen. Do you have children to take over your business? Are they able to? Do they want to? If you have more than one child, do you want all your children involved? Should they own it and someone else manage it? Should you sell it?
What to think about
Depending on what you want to do, there are different things to think about. If your goal is to sell it, then you want to focus on making it as healthy and profitable as possible to ensure a good price when the time comes.
Do they require Training?
If you are handing the business down, you still want it to be in good shape, but you also need to start thinking about who will take it over. What training do they require and do you need to mentor them?
It’s obviously very important to have a Will in place. This will carefully detail how you want the business to be passed on and protect it from inheritance tax. Your business assets may qualify for relief from inheritance tax or there may be things that you can do to reduce the impact of the tax.
Business relief for inheritance tax reduces the value of a business or its assets for inheritance tax purposes when you die.
Business Property Relief Trust
The proceeds could one day become taxable for your beneficiaries, so it may well be wise to establish a Business Property Relief Trust which will ensure that the relief is protected.
Share purchase agreement
If your family would rather receive money than the responsibility of taking over your company, then it may be worth considering a share purchase agreement. This allows surviving business owners to buy your shares if and when you die.
There are all manner of approaches to ensure that your business is protected for your beneficiaries. For help with any aspect of this, please call ELM Legal Services on 0800 019 4557.