Succession planning is a logical step for a business owner who wants their company to keep running, even when they can no longer head up operations. At Leskun & Son Accounting, we understand why business succession planning is important and the necessary steps that you need to take in order to properly prepare for the future of your business.
What is Succession Planning?
A succession plan is the method by which a business owner transfers over ownership of the business to another party once they depart from the company (due to death, disability, or retirement). This process also determines the assignment of assets and wealth accumulated by the company.
The Benefits of a Business Succession Plan
Like a good business plan, a succession plan is important because it gives the owner and their employees a guide for conducting business after the current owner leaves the company. By establishing and implementing a carefully designed succession plan, business owners, partners, and minority investors can derive a number of benefits, including:
- The price for a partner’s share will be agreed upon beforehand.
- In the event that the owner dies, life insurance will already be in place, so benefits will be readily available to cover the deceased’s share of the business.
- When coupled with a comprehensive estate plan, a succession plan can expedite the settlement of an estate in the even the owner dies.
- Helps maintain peace within a family or group of people in case the owner is no longer there to give an opinion.
The Essentials of a Business Succession Plan
A business owner needs to be objective in determining what the future prospects of the business are, particularly if and when the owner is no longer at the helm. After determining if the business has the potential for long-term viability, the key considerations in a succession plan include:
- Choosing a successor
- Ascertaining the value of the business
- Obtaining life insurance
- Determining the best method of transfer
If you would like to learn more about why business succession planning is important, or if you are interested in one of our services, please contact Leskun & Son Accounting at 604-532-0061 or by filling out a contact form on our website. We are proud to offer a variety of services in tax preparation, bookkeeping, and business consulting to business of all sizes.