Succession planning in the world of small businesses is complicated to say the least.
Taxes. You work hard, build up a decent business and want to transfer it to your kid(s). Except here comes the "T" word. What can we do to minimize the taxes due when the shares are sold, or the company transferred?
It depends. I end up saying this very often because everyone and every situation is unique.
Everything needs to be looked at. Not just the business, but the people involved as well. Is there a way to pay the taxes cheaply? Can we arrange things so that taxes are minimized or at least deferred? All good questions. The answer is .... it depends.....
However, most likely there are ways to handle this tax-efficiently. When a business is just starting out, it is easier to structure things to make it tax efficient later on down the road. There are also ways to cover some basic financial requirements of a small business while making the tax bill a bit more affordable.
Even when a business is more mature, there are still ways but they become more limited and sometimes more costly. I am currently on this exact scenario ... a mature business needing to be transferred to the child. There are fewer options, but with the help of a tax expert, (a Fiscalist), we are trying to find the most effective way to handle this.
Entrepreneurs know their own business. Quite often though, they don't know the surrounding aspects of running a small business. This type of situation is where it is invaluable to have knowledgeable people you can rely on for advice and guidance.
We will find a way to transfer this business and pay the least amount in taxes possible.