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Passing on the family business is an exciting experience and a huge step for all who are involved. Here are our top tips for having a smooth and successful transition:
1. Formulate a strategy focused on the family.
2. Formulate a strategy focused on the business.
3. Make a Succession Plan, which includes setting dates for retirement and the training for who will follow.
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4. Make an Estate Plan.
These are the four key points to a successful business transfer. They basically guarantee a transition for years to come within your family when implemented correctly.
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The purpose of the family strategy is to keep a well-functioning business. The policies for the role of the family in relation to the company are set in this strategy. There may be policies for entering and exiting the workforce of the business. It should incorporate the basic guidelines as well as a mission statement that explains what is important to the family. The strategy needs to take into consideration who in the family would like to have significant roles in the business and who would like less responsibility.
What is a strategy focused on the business?A strategy focused on the business permits each new member of the family to establish their own future for the company. To make sure that everyone has the same idea as to where the business is headed, there is a need to formulate goals. The strategy should concentrate on the future of the company at a particular date.
The purpose of the succession plan is to aid those who founded or are in control of the company through the transition. It should explain the details of how to know when the next generation is ready to take over and the process for that transition.
What is contained in an Estate Plan?The plan for the estate is vital for the company and family. In the end, without a strategy, there will be higher estate taxes than needed, which in turns gives less to the successors. This plan should be in accordance with the succession plan to ensure the transition of the business is done in the most tax effective way.
Scarsdale accountant Paul Herman is here for all your financial needs. Please contact us for all inquiries and to receive your free personal finance consultation!
Herman and Company CPA’s proudly serves Scarsdale NY, Larchmont NY, Pound Ridge NY, Purchase NY, Mamaroneck NY, White Plains NY and beyond.
