The Importance of Attorneys in Business Successions
If you own your own business, there is a high chance that it is your life’s work. If that is the case then that means you have poured blood, sweat, and tears into building and maintaining something successful and sustainable. However, many business owners tend to be so engrossed in the daily nuances of the company that there is some oversight when it comes to business successions. What are you supposed to do when you are unable to work anymore? It is exactly for this reason that you should think about planning out your business succession, and more importantly, seeking out a proper business succession attorney to navigate the complex process that it can become.
There are a lot of scenarios where businesses are sold by families because of how complex a succession becomes to the beneficiaries. If it becomes too much to handle in the midst of running the business daily, often times the families will sell the company to pay taxes or other complications simply because the business succession process was not carefully planned. In addition to these inherent obstacles, there are more factors to consider like any stakeholders in the business and how they may feel about the changing of hands in the company. Other aspects to consider are any tax implications or chain of command in the company after ownership changes. The list can go on and on, but when you tally the total it still remains that when the time comes to build a business succession plan you will need to consult with only the best business succession attorneys to ensure your legacy and quality of life for those in your company.
Business succession attorneys are absolutely essential in the process of succession because they can handle a variety of legal issues like estate and tax planning, business reorganization, succession agreements, insurance issues, charitable trusts and drafting buy-sell agreements only to name a few. Without the expertise and guidance for many of these issues, you may end up complicating your business succession and potentially damaging the company for the future of the employees once you leave. It is for this reason that enacting an effective succession plan is in the benefit of both the employer and the employees – expressing these concerns may elevate the quality of life and career development for your workers. The ability to clearly distinguish job roles, ownership and insurances is necessary for a successful business transfer.
One of the primary reasons you need a business succession attorney is to answer the question of ownership. While most family business owners plan to hand the business down to their children, there are legal implications that attorneys will fully consider. A common oversight for ownership occurs when a chain of command is not clearly outlined. It is crucial to establish a hierarchy of job roles while you are still with the company, otherwise, the internal balance of power for the business will up-end the structures you have successfully built. Some business owners will slowly introduce their children, or successors, to the functions and operations of the company before they leave. If done successfully, the probation period can minimize many issues that could occur during business transfers, however, it does not address some of the more nuanced aspects of a business succession plan. Some of the complexities you would need an attorney for include arranging a buy-sell agreement with various tax implications and shareholder dynamics. There are business owners that choose to limit who can buy the business after they leave. If you want to sell to insiders only then an attorney can assist in drafting an employee stock ownership plan. These retention plans also help to minimize any tax problems, and oftentimes a family business will leave open lines of credit for safety. The changing of ownership alone has many legal implications attached to it and it only emphasizes the need for an attorney to handle a whole lot of these issues for you.
Another need for a business succession attorney is to help you review the company’s existing insurance policies. Depending on the various active plans for the employees, it would be best to keep an eye on these as any changes occur in order to minimize complications. If your successor is somebody that is unaware of managing these logistics, then a business succession attorney would be hugely beneficial in the smooth transfer of employees’ benefits.
The luxury of an attorney during this process allows you to focus on all of the other aspects of a business succession plan. If you want to set up a blueprint for liquidating the business so that it goes off without a hitch, then seeking an attorney would be in your best interests in order to ensure that the instructions are clear and carried out entirely. Otherwise, your assets may be granted to parties outside of the interests of your legacy. Attorneys will assist you by informing you of all the tax considerations for your type of business. Depending on what type of business you run and what method you choose to exit the business can greatly affect the amount of tax you owe. Working with an attorney would minimize your tax liabilities for you, your family and your estate. For instance, the attorney would assist you in setting up trust funds – effectively avoiding any estate taxes.
It is clearly in your best interest to seek a business succession attorney when drafting a business succession plan in order to account for all possible situations in the future. This will provide some stability down the road when you are no longer directly involved with the operations; ensuring quality customer satisfaction as well as happy employees. Understanding how much an attorney can help you with a business succession plan only emphasizes the negative consequences of doing it incorrectly. Cleary, it’s not as simple or straightforward of a process as many business owners believe it to be. Protect your legacy for you and your family by seeking out a reputable and caring team of attorneys to assist you in your business succession plan.