In October of 2021, as a result of the largest leak of documents in history, 11.9 million files from over 2.94 terabytes of data were publicly released by the International Consortium of Investigative Journalists [ICIJ].
A recent survey by the Canadian Federation of Independent Business shows that less than 10 percent of small and medium sized businesses have a formal business succession plan. Less than 40 percent of businesses have an informal plan, and more than 50 percent have no business succession plan at all. The Burton Law Firm believes your business needs a concrete plan for the orderly transfer of ownership in the event of a change in circumstances. If you are like the majority of business owners who are in need of a viable succession plan, let us use our familiarity with this issue to guide you to the perfect exit plan.
Simply put, a business succession plan is an estate plan for your business. It contains a set of written agreements that detail what happens when a business owner leaves the company, becomes incapacitated, or dies. In any of these circumstances, a business succession plan will ensure a smooth transition to new ownership and management, meanwhile accounting for tax and estate planning consequences for the departing owner.
This type of planning is especially important for closely-held family businesses, where the success of the business is dependent on the vision and guidance of the founders. Lacking their creator, these businesses often struggle to succeed or survive without a plan. By thinking about ownership, management, and continuity issues in advance, business owners can rest assured that the company they built from the ground up will enjoy continued success after they are gone. A properly drafted plan will do exactly that.
In a scenario involving a closely-held family business, there are many benefits beyond the obvious ones that can come from a properly implemented succession plan. A succession plan can establish a formal policy regarding family participation in the business, provide standards to assure that future family managers are capable and willing to oversee the operation, specify successors or an appointment process, and integrate the company succession plan into the estate plan of the owner.
Outside of the framework of management succession, business succession planning will provide for retiring generations, reduce tax burdens, income tax consequences, and estate tax payments, facilitate the retention of key employees, and aid in maintaining the value of stock and assets during transition.
Perhaps the most important benefit that a succession plan can impart to you, is the peace of mind of knowing that your life’s work will continue after you are no longer in charge. We understand the human desire to leave a strong mark behind, and know how to craft a plan that will allow your business to thrive far into the future. We know how important it is to have your business provide for your family, and to have your family provide management for your business.
The Burton Law Firm is perfectly situated to integrate your business plan, succession plan, estate plan, and tax plan into a cohesive whole that will protect your business and assets well into the future. Let us use our expertise to assist you in sheltering your creations.