Business Succession Planning lawyer Washington, D.C.
As a small business owner in Washington, D.C., your immediate concerns probably center around positive cash flow and stability with your balance sheet. Since you are focused on the present and near future, planning for retirement or how to hand the business over to someone else is likely a lower priority. However, it is important to establish a business succession plan, especially if you are nearing retirement age. The idea of coming up with a business succession plan can seem daunting, but it does not have to be. An experienced business succession planning lawyer in Washington, D.C. can advise you on the best course of action for your particular situation and ensure that you have long-term plans in place.
Determining Your Business’s Worth
When deciding what to do with your business in the future, determining your business’s value is important. Business valuations can be completed by a certified public accountant (CPA), or all business partners can come to an agreement on what the business is worth.
If your business has multiple partners, you should consider purchasing life insurance on all partners. If a partner should pass away before ending the business relationship, the death benefits can be used to buy out the decedent’s business shares and transfer them to the remaining partners.
There are several common ways that ownership of a business can be transferred. These methods include:
- Passing the business along to a family member or other heir.
- Selling your business to someone outside and independent of your organization.
- Selling the business to a key employee or a co-owner.
- If your business has multiple owners, selling your interests back to the company, which can distribute them to the other remaining owners.
While you can sell a business, many owners would prefer to have their business be run by a family member. You do not have to name just one family member; you can opt to pick several family members who have different strengths. Depending on your family and the choices you make, it is not uncommon to have family members who resent not being chosen. This could create some family drama and hurt feelings that you should be prepared for. A Washington, D.C. business succession planning lawyer can help guide you through these decisions.
Steps in Creating a Business Succession Plan
When planning for business succession, you should start by determining what your goals and objectives are. Do you have a current succession plan in place? Are your goals reasonable and attainable? You should decide on the importance of continued family involvement, considering whether it would be better to bring in professional management. You should have a plan in mind to determine how much cash flow you will need to meet your retirement goals.
Next is to establish a decision-making process. Be sure to specify how disputes will be resolved, put your succession plan in writing, and communicate that plan to your family and stakeholders. You should identify your successors, including both owners and managers. Name what active and non-active roles your family members will play.
Ensure your plan addresses important topics like tax implications. Looking into estate planning details is important, as this can help minimize taxes and avoid any delays in transferring stocks or ownership shares. Consider different options on how to handle the transition. Will it be a gift, a purchase, or a combination of the two? If a purchase is involved, you should consider financing options and establish a timeline for implementing the succession plan. These are all issues a Washington, D.C. business succession planning lawyer has knowledge and experience in.
Our Firm Can Help
A Business Succession Planning lawyer Washington, D.C. community members rely on at Eric Siegel Law has been providing legal counsel to those in the DC area for many years. We have thorough knowledge of business succession and litigation and are here for your legal needs. If you have or are involved in a business, it is important that you think about what may happen if things change in the future. Business partners may eventually disagree, and maybe you want a certain loved one to take over your business in the event of your passing. These are both examples of what we can handle, among many other business-related situations.
Why You Need a Business Succession Plan
Most businesses are family-owned, whether it be a large enterprise or a small operation. There may be tax implications and consequences that can happen during a transfer of succession, regardless of the business size. You can help yourself avoid these road bumps by having a plan for easy business transfer. You may choose to transfer this business to your spouse, partner, family member, close friend, third party, or other entity.
You can establish this plan without legal guidance, however, it is highly discouraged that you do so. Writing your plan and not having a lawyer look it over can be devastating in the event that succession needs to happen. Even well-intentioned people may write a business succession plan that is not binding or reliable. A business litigation lawyer Washington, D.C. families depend on can help you by:
- Avoiding the probate process or other disputes
- Reducing or eliminating your estate taxes
- Calculating the monetary value of your business
- Structuring the business so that it safeguards your profits and suits your needs
- Providing the transfer of your expressed interests to others in the business
- Restructuring positions and job duties
- Assisting with disputes among business shareholders
When Dissolution Needs To Happen
There may come a point where a business dissolution must happen. There are various types of dissolution, which entail involuntary dissolution, voluntary dissolution, contested dissolution, and agreed dissolution. We can guide you through each step of the dissolution process. We have briefly defined each type of dissolution below:
- Involuntary Dissolution: shareholders, members, and partners vote on whether to dissolve the business.
- Voluntary Dissolution: when a business dissolution is ordered by the court or state.
- Contested Dissolution: when specific members, partners, or shareholders wish to dissolve the business but not everyone agrees.
- Agreed Dissolution: most of the partners, shareholders, and members agree that business dissolution should be the ultimate outcome.
Call Eric Siegel Law Today
By consulting with a member of our team, you are putting your best interests first. We are ready to take your call and offer counsel immediately. Call Eric Siegel Law to speak with a Washington, D.C. Business Succession Planning lawyer as soon as possible.