After tough years building their businesses, most business owners take great pride in what they've created. Some owners are so proud and dedicated to their businesses that they don't wish to retire. Instead, they intend to continue leading the business they love until their dying day.
The San Antonio Business Journal’s recent article, "Plan your exit even if you never plan to leave your business," explains many owners think it's OK to delay preparing for their business exit. Some think there’s no reason to plan for their exit whatsoever, because they're willing to die in the business.
Owners should always have an exit plan prepared and ready. Things change, like health, the economy, and opportunities.
Be ready and consider these three key ways exit planning can help you and your business—even if you don’t intend to leave:
- Decrease your taxes. Whether you ultimately decide to sell your business, transfer ownership, or die working, you probably don't want to pay more taxes than you have to. There are two ways exit planning can help minimize taxes, even if you truly want to work until you die. If your business value increases, your estate can benefit from a step-up in basis if your ownership transfers pursuant to your estate plan. This saves your estate or beneficiaries from paying duplicate taxes on the entire business value.
The lifetime exclusion for gift and estate taxes is now to the point where most small and mid-sized business owners don’t need to pay estate taxes if owners have created an appropriate estate plan. Your exit plan lets you leverage these benefits, since estate planning is a vital component in proper exit planning.
- Protect your values. If you created a work culture that’s so unique and strong that it helps your company stand out in the marketplace or your business gives back to the community through charity work, exit planning lets you pursue and preserve your progress toward those objectives. Exit planning strategies can foster the culture you’ve built, protect the employees who made the business a success, and help you build the legacy you want. Exit planning can help keep your chosen values front and center and protect its value, even without your presence.
- Growing your business. Everyone wants their business to grow in value, but many business owners get to a point where they can’t grow the company any more by simply doing the same things they’ve been doing. However, exit planning concentrates on building business value, whether you exit or not. These activities can help you increase your business’ growth potential, by emphasizing value drivers. Those are the aspects of your business that make it attractive to buyers. When it’s done the right way, installing value drivers can make your ownership even more fulfilling—concentrating on certain value drivers can let you focus on only your favorite tasks within the business and delegate your least favorite responsibilities to other qualified employees.
Reference: The San Antonio Business Journal (October 16, 2018) "Plan your exit even if you never plan to leave your business"
Use exit planning to address concerns about the future of your business, family, and employees. We can help. Give us a call at (978) 342-1914 or visit us at www.dellamonaca.com.