Why you need to be proactive about succession planning

| Feb 17, 2021 | Business

As a South Carolina business owner, you know that it takes a long-term vision to develop your company into a profitable entity. Ideally, a succession plan will be a part of that vision. Let’s take a careful look at why succession planning is one of the keys to your future success.

You can transfer the business in an advantageous manner

Let’s say that you plan to leave the company to your daughter after she graduates from college in five years. Instead of selling the business at once, you can start transferring ownership in smaller increments without losing your standing as majority shareholder. Federal law allows you to make gifts of up to $14,000 per year without incurring gift taxes.

Taking advantage of this rule may allow you to sell the company in a way that minimizes estate, inheritance or other tax bills. An attorney experienced in business succession planning issues may be able to assist in the process of structuring the terms of a sale.

Keep the brand intact despite your personal strife

Let’s say that your goal was for your minor children to each have an equal share of the company at some point in the future. Placing the business in a trust ensures that they receive their inheritance even if your marriage comes to an end. A trust can also ensure that the company remains in the family if you pass on before your children are old enough to take ownership of it.

Keep the money flowing after you’re gone

Depending on how your company is structured, it may be possible to retain an equity stake in the business after you retire. Therefore, it is in your best interest to take steps to ensure that key employees, loyal customers and important parties remain tied to your brand.