One of the more common worries of Colorado small business owners is thinking about how their company will proceed once they retire or pass on. Those who own 100% of their business usually want to leave the company in the hands of a family member, while others may simply want to sell outright. However, all that is only possible if the right succession plan is crafted.
One of the first things your business planning advisors will tell you is that your company may continue to grow throughout the years. That means that you must constantly be reminding yourself to keep in mind the amount of taxes that will need to be paid on the value of the company, not at this moment but at the time of your departure.
Buy-sell agreement plan
Not all business owners want their family members to take over their company at the time of their death. This could be for a number of reasons, such as irresponsibility or lack of education. In this instance, an owner may want to sign a buy-sell agreement with the rest of the owners of the company. This means that at the time of death, the other owners will purchase their amount, and thus the company remains within the original framework.
What is included in a succession plan?
A succession plan can be quite complex, especially if there are multiple owners. However, the basic items that must be included must be the items that address the transfer of management and overall ownership of the company. In addition, your succession plan may also include items such as:
- Training for new management
- Delegation of company tasks
- Outside advisors
As you can see from the information above, there are a number of items to keep in mind when creating your succession plan. Thus it is highly recommended to have an attorney experienced in business law at your side throughout the process.