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Who should you pass your business down to?

When building your business, you must also consider how you want to pass it down. After all, a time will come where you may no longer wish to work in your current position. In unfortunate situations, you may no longer hold the capabilities to do so.

So what do yo do when planning your business succession? Who should you pass it along to?

Consider your retirement options

Business.com discusses how to pass on a family business. First, note your needs as you consider retirement. If your business is your sole source of income, you may need to hang on to it in some form to continue supporting your way of life after you retire. There are plenty of creative solutions that can meet this need. For one, you could stay on as a paid advisor. This way, you can also continue taking an active role in business decisions. It helps you reinforce the company’s vision for its successors, too. You can even stay on as an investor instead.

Decide how to transfer the business

Next, look at your options for transferring the business. As a family-owned business, you can pass it on to a relative without any sales. You can offer it as a gift, but note that you may end up subjected to gift taxes if you do so. Note also that giving away only a portion of the business opens you up to all associated taxes.

You can also sell or partially sell the business. These options are self-explanatory. Selling to a buyer gives you direct and immediate access to income. You may need to draft a note sale, though. A partial sell allows you to retain a controlling interest in the company.

Before you make your decision, it is important to consider all options. You may also benefit from the guidance of a legal expert in this time.

 

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