As you age, you may want to create a will or trust. However, it is crucial to remember specific aspects of your estate plan. If you own a family business or are a member in a sole proprietorship, partnership, close corporation, or limited liability corporation, you must consider your exit strategy and who will run the company after you leave.
If you plan on retiring or become ill, it is crucial to leverage business assets to your advantage to ensure your company’s success after you leave. An Irvine business succession planning lawyer can help. With the assistance of an experienced trusts and estates attorney, you could meet your goals and secure the future of your company’s assets.
Early Planning for Business Owners in Irvine
Family businesses are the bedrock of the American economy. Often, these companies create wealth and job opportunities that can be passed down for generations. Unfortunately, many company owners wait for an emergency to change ownership. Due to poor planning, only 30% of family businesses survive to be run by the second generation. However, bringing children into a family business early could help ensure the smooth transition of a business to the next generation.
Tax Incentives
Planning an estate early may include taking advantage of certain tax related incentives. If a business is a sole proprietorship or partnership with both parents as partners, the owners may be able to deduct wages from income which could minimize payroll taxes. You should inquire as to details of tax incentives with your CPA.
Building a Retirement
Small business owners should consider buy-sell agreements that specify how company shares will be treated when another member exits. Knowing that other partners will acquire an owner’s share for an agreed-upon price is another step toward building wealth for retirement. Preserving business profits to build wealth is one component of succession planning a local attorney could help a business owner with.
How a Business Succession Planning Lawyer Can Help
Succession planning includes strategizing about a company owners’ goals. A legal representative can help develop these strategies, including:
- Discussing plans for business operations, including a pass-through strategy and plans to shield owners from certain liabilities
- Bringing family members together to discuss succession plans, employment contracts, non-compete agreements, and sale contracts
- Mediating family disputes while representing an owner’s interest
- Coordinating business succession with asset protection and estate planning for retirement
- Setting up trusts and wills
- Facilitating business valuation
- Discussing a tax strategy to minimize liability
These strategies are not all-inclusive and depend on what an owner wishes to accomplish with their company. Succession planning should begin early, and owners should determine what entities the business will operate under. Planning often depends on circumstances that arise during the life of a business. A diligent attorney can focus on a business owner’s retirement and help keep a business on a successful path for future generations.
What Happens if a Company Owner Does Not Have a Succession Plan?
Business owners perform tasks over many months to make a business successful. However, people often forget to consider what happens when they retire or must relinquish their rights to a company.
An estimated 85 percent of family business owners have no succession plan, which can lead to unexpected taxes, income gaps, and an end to the business when an owner leaves. A skilled lawyer in Irvine could work to avoid any potential issues when planning for a business succession.
Call an Irvine Business Succession Planning Attorney for Help
If you own a business, you should begin planning for the future of your company. Even if you have been running your business for many years, it is never too late to adopt a fluid strategy that changes as your business grows.
A legal representative could preserve your wealth and ensure your business is financially sound. To plan your estate and retirement, speak with an Irvine business succession planning lawyer today.
