The London 2012 Olympics are over, but key to its ethos is the development of a lasting legacy. Legacy is important for businesses too ? who will take on your business when you retire; how do you plan for it; what are the dos and don?ts? Simon Morris from Stones Solicitors LLP gives his thoughts:
Succession planning essentially involves transferring ownership and control of your business to new management.? There are a number of options including: transferring ownership to a family member, transferring ownership to a non-family member, or disposing of the business through a sale, management buyout, management buy-in or voluntary liquidation.
Very few business owners consider how to put in place succession planning, even though a recent survey revealed that 60 per cent of business owners agreed that succession planning is important. ?The same survey showed that more than half of family firms had no succession plan in place.
Transferring ownership can be an emotional and complicated process and this is why it is often ignored until it becomes an issue, for example, when the owner becomes ill or too old to carry on running the business.? The best advice is that even if you think you have years to go before you will have to consider succession planning, it is best to start thinking about it now. Today, the age gap between generations is about 25 years, so if you plan for your children to succeed you and they are young, they will need good training and mentoring to get them up to speed. However, of all the types of business that need succession planning, it is typically family businesses that leave the process until too late.? An effective succession plan should form part of your overall business development strategy and consider the various ?handover? options available.
As well as investigating and discussing the ?nuts and bolts? of succession, it is best to take professional advice regarding the tax implications of each of your exit options.?
Issues will include the amount of capital gains payable.? Entrepreneurs? relief is available to individuals (and in certain cases, trustees) who, by the sale of their company or business, realise qualifying gains. The relief applies a lower rate of Capital Gains Tax (of 10 per cent) to those qualifying gains up to a lifetime limit (?10 million with effect from 6 April 2011).? Inheritance tax implications will also need to be considered, and certain business and corporate structures may not benefit from the various reliefs available.? ?Planning and restructuring your business in certain ways now, can assist your estate avoiding the worst of this tax at a later date.?
Use the best advice available to ensure that the family?s business wealth remains within the family.
Without a proper strategy in place, business owners could find themselves working well into their 70s, which could hold the business back and limit the amount of income they can get out of it.? Choosing the right successor and the right time to transfer the business gives the business the best way to ensure its on-going success.
Business owners should plan their succession with their professional advisors sooner rather than later.? When that succession happens they should be free to sit back and enjoy the fruits of their labours.
Source: http://www.pr-works.co.uk/news/take-inspiration-from-olympic-legacy-for-your-business
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