Business Succession Planning

<strong>Do You Have A Business Succession Plan?</strong>

Do You Have A Business Succession Plan?

As an entrepreneur, your path to financial freedom comes with unique challenges. Your business likely has become an extension of you. The process of preparing for the future of your business in a way that both maximizes the value of the business and ensures a smooth transition for you, your employees, and your customers is unique to each business. Business succession planning can involve various strategies such as selling the business to a third party, transferring ownership to family members or employees, or liquidating the business. The goal of business succession planning is to help you achieve your personal and financial objectives, potentially minimizing the tax consequences of the transition all while helping to reduce any negative impact on the business. Employing the Financial Freedom Framework towards this end can guide you toward your successful transition.

Applying the Financial Freedom Framework™
Creating a Business Succession Plan


     Income Plan 

As a business owner, determining the value of your business and the structure of your exit from the business will drive the planning surrounding your plan for income. Whether you carry the note for the sale of your business or determine how to structure income from a single lump sum sale, creating a plan for your income beyond your business that is both reliable and tax efficient is key to achieving financial freedom.

Your income plan may also include topics such as social security planning, pension maximization, income investing, annuities, analysis of other income generating assets and expense planning all to create an income plan that will maximize the transition from your business and coordinate the transition with your other streams of income. 


     Investment Plan

As you move away from your business, whether you’re heading towards retirement or an early exit, an investment plan helps you make the most of the transition. Transitioning your assets from business assets to investments assets can help you reduce taxes and create additional liquidity promoting a greater degree of freedom than you likely experienced as an entrepreneur. Creating an investment plan that allows your assets to tax efficiently grow over time will allow you to combat inflation and set yourself and your successors up for a stable financial future. 


     Tax Plan

There are often large tax implications to transitioning from a successful business, however, structuring your exit with a forward-thinking tax approach may allow for more of your business value to end up in your pocket. Planning and strategizing for your taxes can help you optimize your earnings while still fulfilling your tax obligations. There may be opportunities to intentionally structure business entities, asset ownership, cash flow and purchase and sales agreements to potentially reduce taxes and maximize the after-tax value of your transition.


     Healthcare Plan

Planning for your healthcare in the absence of your business may bring some unique challenges. Planning for pre-Medicare health insurance, Medicare planning, out-of-pocket medical expenses, potential long-term care and assisted living expenses and final expenses can give you the peace of mind that you can age with independence, grace and dignity.


     Legacy Plan

Your legacy plan allows you to be intentional about who and/or what benefits from your wealth. Giving both during life and at death can ensure that the efforts and reputation that you made through your business continue to have an impact for years to come. Whether you plan to give to your family, charitable causes, or educational institutions — a well-thought-out legacy plan can help make the most of your wealth and maximize the impact that you have on the future.

Elevant Wealth and LPL Financial do not provide legal advice or tax services.  Please consult your legal or tax advisor regarding your specific situation.