How a CPA Can Help You with Your Succession Planning
Even if you have the most successful family business out there, one day you’ll need to plan for a transfer of ownership. A succession plan helps business owners ensure that the business will keep operating with minimal disruption, but it can also provide tax benefits to the owner and successor. As with anything, it’s important to call in the experts for this.
Succession plans should involve a team of lawyers, appraisers, financial planners, accountants and insurance experts, but the focus of this piece is to highlight the advantages of relying on a CPAs expertise to map out your succession plan.
Unfortunately, despite the prevalence of family businesses and the need for them to create a succession plan, very few of them actually put one into place. Family-owned businesses are responsible for 60% of jobs in America and yet only 15% have something similar to a succession plan. What’s more, businesses have a tough time surviving through multiple generations: only 30% make it to the second generation and 12% make it to the third. This data proves the importance of putting an effective, wise succession plan into place.
CPAs (especially those already working with family businesses, are in a unique position to help. Not only have they already established relationships with business owners and their families, but they also understand the business and the company’s financial position. Including them in the succession planning process from the start (and stretching that process over several years, if need be) can be extremely beneficial for both the business owner and the future one.
Taking time to change hands gives the successor more time to learn the ins and outs of the business as well as giving the owner more time to relinquish control of it. CPAs can also assist with implementing tax-efficient business structures and transference strategies.
How Can a CPA Help?
Here are just a few of the practical ways CPAs can help with succession planning:
- Reviewing the Current Transfer Tax Law
- Assisting with the Transfer of Businesses as Gifts
- Helping with Creating Family Limited Partnerships or Limited Liability Companies
- Providing a Smoother Equity Recapitalization Process
- Transferring Assets into Grantor Retained Annuity Trusts
Having a professional, well-trusted financial advisor at your disposal will help make every aspect of your succession planning smoother. Most business owners don’t work on their exit planning because they feel they don’t have time to deal with it – but if you want your business to continue on after you, you should make a plan now to prevent it from slipping through the cracks later. Don’t be like the 40% who have no contingency plan, or the 49% who haven’t planned at all.
Trust a CPA to help carry your business on to the next generation by assisting you with your succession planning. Reach out to us at Miod & Company today!