Understanding Business Succession Issues
Business attorneys can help company owners to create a plan for what happens when the owner wants to move on from the business. Sometimes, disability or retirement cause a business owner to need to pass the company on to someone new. In other situations, a business owner continues to operate the business until his or her death, at which time the company passes into new hands. Whatever the specific reason for the transition, the transfer of a company to someone new can have a big impact on ongoing business success.
Business owners need to create a succession plan in order to ensure that the new owners are able to seamlessly take over operations so there is no period where the company is not being properly managed.
Experienced Irvine business attorneys at Brown & Charbonneau, LLP can provide invaluable assistance to companies in making sure the right choices are made when creating a business succession plan. Give us a call today so you can plan ahead for your company’s future in order to ensure the business will stand the test of time.
Understanding Business Succession Issues
One of the situations where business succession issues can have the most profound impact on ongoing business operations occurs when a company owner passes away. The death of the owner of a business can put the company at risk in many different ways if advanced plans have not been made.
One problem that could jeopardize ongoing company operations after a death is the possibility that estate taxes will be assessed on business assets. According to the California State Comptroller, estate taxes were phased out in California beginning in 2001 and no California state estate tax return must be filed for deaths that occur after January 1, 2005. However, there is still a federal estate tax, which is assessed on estates valued at over $5.45 million (as of 2016).
When a business is structured as a sole proprietorship and the business owner owns company assets personally, it is very common for total assets to exceed $5.45 million, especially when business assets are combined with personal assets in the estate. Unfortunately, a lot of wealth is likely tied up in the business when this happens – which means there may not be cash available for the taxes on the estate to be paid without either taking out a loan or selling business assets. This can be a big problem because it can make it hard for companies to continue to be profitable.
The death of a company owner can also create other problems in addition to this major financial issue. There may be a dispute over who should take over management of the business or of what should be done with it. Some family members may want to sell the company, for example, or ownership may be transferred to family members who do not get along and who are not able to manage the company effectively while working together. If there is disagreement over what to do with the business or how ongoing operations should go, the value of the business can be undermined as well.
When you have worked hard to build a company, you do not want your death to be the end of the business. The same is true if you retire, become incapacitated, or need to leave the company for any reason- you want operations to continue. Your company can be a lasting legacy that lives on well beyond your life, but only if you deal with business succession issues with the help of Irvine business attorneys.
How Business Attorneys Can Help With Succession Issues
Irvine business attorneys can assist you in a number of ways with proactively addressing business succession issues. There are steps you can take to protect your company, such as incorporating your business, creating a trust, creating a comprehensive estate plan, and creating a buy/sell agreement with business partners.
The right approach to protecting your company and its legacy is going to vary depending upon your situation, including based on who you want to continue the operations of the company after you are gone.
Brown & Charbonneau, LLP has extensive experience helping business owners to create customized plans that allow for the seamless transfer of business ownership and business control to new owners. We care deeply about helping you to make sure your company can last for a long time, even after you are no longer in charge. To learn more about how we can help to facilitate the successful transfer of your company to new owners, give us a call at (866)237-8129 or contact us online.