Razzano is an associate with the Herzog Law Firm in Saratoga Springs.
BY BRITTINY B. RAZZANO
Excuse Number 1: Too Busy.
As a successful business owner, you may
have your hand in the day-to-day operations
and management of your business. It seems
like there is never enough time to sit down
and formulate a plan for your business when
you retire or after you pass away.
You have worked hard to make your business
thrive. It’s worth taking the time to ensure
its continued success. If you wait too long, it
will become more difficult to retire when you
want to, you may get a lower price, or ultimately
generate a greater tax liability. In the worst case
scenario, you may pass away unexpectedly
without ever formulating a plan, putting the
fate of your business in jeopardy.
If you plan ahead, you will be able to clearly
state your intentions and put your important
business operations in writing, to act as a road
map and guide for the future generation of
your business.
Excuse Number 2: Loss of Control.
It is difficult to give up control of a business
that you have worked so hard on. However, if
you maintain sole control and refuse to delegate,
the future successors of your business will
never be properly trained for when the time
comes for them to take over, whether that’s
when you choose to retire, are forced to retire
due to disability, or pass away unexpectedly.
By delegating while you are still managing
the business, you can ensure that your successors
will be trained under your guidance and
benefit from your experience. You will also be
able to instill your values and techniques to
ensure the continued success of your legacy.
If you choose to retire from the full-time day-to-day
operations of the business, you have the
opportunity to act as a consultant on a part time
basis to stay involved with your business
by not cutting all ties at once.
Excuse Number 3: Uncertainty of Future
Successors.
It may take time to determine the best successors
for your business. By procrastinating,
even considering your choices, you run the risk
of losing control of this choice. As mentioned
above, by delegating positions, you can test out
future successors to be sure that they will be
a good fit, provide them with an opportunity
to take time to learn the position, and ensure
it is something that they want to pursue. You
may want to consider instituting a mentoring
program as a way to provide for a smoother
transition. In some businesses, the choice for
successors is clear, because there are multiple
partners or because it’s a family business with
many members currently involved in the
business. However, family businesses are very
tricky, particularly when only some of your
children are involved. This is especially cumbersome
when dealing with estate planning,
if it is your wish to split everything equally
between your heirs.
Excuse Number 4: Complex Tax Issues.
Tax issues are at the heart of all transactions
and business succession plans. There are
income and capital gains issues to consider, as
well as gift and estate tax issues. Before entering
into a transaction or considering a business
succession plan, it is imperative that you
consult with your attorney and accountant to
ensure that you are transferring your business
in the most tax-efficient way possible.
It is important to consider tax issues far
in advance of any transaction, as it may take
time to analyze and ultimately determine the
appropriate course of action.
As always, it is important to consult with
your trusted advisors, such as your attorney,
your accountant, and your financial advisor,
to assist you with your business succession
plan. Be sure to review your plan on a regular
basis to ensure that it remains in line with
your goals.
Don’t gamble with the future of your business.
With the proper planning, you can arrange
a fruitful retirement and the continued
longevity of your business long after you’re
gone.