Prepare Your Business for Your Expected or Unexpected Departure

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Prepare Your Business for Your Expected or Unexpected Departure

You’ve spent so much time and effort building your business. As a small business owner, your business isn’t just a job. It is an integral part of your life. Aside from your family, your business may be your life’s greatest achievement.

It can be difficult and painful to think about a day when you won’t be running your business any longer. Hopefully, that day will come when you decide the time is right to retire and enjoy the proceeds of your hard work. Unfortunately, life comes with no guarantees and the time to transfer your business may come sooner than you think if you get sick or die unexpectedly.

Now Is the Time to Prepare to Leave Your Business

Even if you hope to work for several more decades, business succession is an essential part of your current business plan. Business succession planning not only lets you plan for the continuation or sale of your business, but it also allows you to protect your clients or customers who have come to rely on you. Some of the options you might consider include:

Transferring the business to employees

You have hired dedicated employees who are committed to your business and may be interested in owning the business when you leave. One way to transfer ownership of the business to one or more of your employees is to set up an Employee Stock Ownership Plan (ESOP).

Selling or gifting the business to relatives

There are various ways to sell or give your business to a family member. You could, for example, use an intra-family loan. The IRS allows the interest rate on an intra-family loan to be lower than a typical bank loan. Alternatively, you could use an Intentionally Defective Grantor Trust (IDGT) that you fund through installment notes or annual gifts. Another option is to use a Self Cancelling Installment Note (SCIN). A SCIN allows you to sell your business to a relative in exchange for installment notes. The installment notes continue for a term shorter than your life expectancy and are canceled when you die.

Selling the business

You can plan to sell your business to someone other than an employee or relative. There are different ways to arrange for a sale when the time is right. You can, for example, work with a business broker to find a buyer for your business. The buyer may purchase your business, including the business name, or the buyer may purchase your business’s assets. If you have a business partner, then you may set up a buy-sell agreement that allows the partner to buy your share of the business or you to buy your partner’s share of the business if one of you leaves the business.

Grantor Retained Annuity Trusts (GRATs)

A GRAT may be a good option if you expect to live for several years, you want to continue earning an income from your business, and the value of the business is expected to increase. You establish the trust and fund it with a gift of company stock. You will be paid from the trust for a set number of years. At the end of that period, the trust assets go to the beneficiaries. GRATs cannot be changed or revoked once they are established.

Closing the business

You can decide to simply close your business rather than selling it or gifting it to anyone else. In this case, your business assets may be liquidated.

If you decide to wait until you can no longer work, then your options may be limited. You likely won’t have all of the options described above, and the future of your business may not be what you envisioned. You’ve worked too hard to take that chance.

Consider All Your Options With a Business Succession Lawyer

None of us know what the future holds, but our business succession planning attorney will help you plan for all possible contingencies. We can help you consider all of your options. Then, no matter what happens, you can be confident that the business you worked so hard to build will continue the way that you want it to in the future. Contact us today to talk about your business exit strategy.

Why Choose Jarvis Law

Free Consultation – Discuss your needs during a complimentary consultation with the Jarvis Law Office. We can consult with you virtually, so you don’t even have to come into the office.
High Satisfaction Rate – Our clients have left reviews praising our knowledge, experience, and helpfulness. We have a track record for high-level service and customized solutions.
Focused Practice Areas – We focus exclusively in the areas of elder law, estate planning, asset protection, and business succession planning.
Three Convenient Locations – We have offices in Lancaster, St. Clairsville, and Dublin, making it easy to reach clients throughout Central and Southeast Ohio.
Free Events – Our firm offers free events for Ohio residents. These events cover essential estate planning issues, such as how to pay for long-term care while protecting your assets.
Family First – We’re focused on family. Our family (yes, we employ several family members in the firm) protecting yours. Customized to your family and your values. Leave the legacy you want.

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I have worked with Emily at Jarvis Lancaster location and she is very personable, friendly and has “Great” customer service. I would recommend Jarvis Lancaster location to anyone who needs assistance with elder care planning!