The truth is that many small business owners have no exit strategy for their businesses in the event of their disability, retirement, or death. Given the current economy, it isn’t surprising small business owners focus their energies on business survival, future growth, and even remaining active in business after retirement. However, a business exit strategy not only means having a plan for the unexpected – including financial hardship, injury, disability and even death – it also means having a plan for the succession or transfer of ownership of your business when it comes time to hang up your hat and retire.
Here are a few things to consider as you plan your business exit strategy:
1. Develop a Succession Plan
There is no “one plan fits all” when it comes to developing a succession plan for your business. But having a succession plan (including choosing and training a successor) can help provide some practical direction and deliver the peace of mind that comes from knowing that your life’s achievement is in good hands.
2. Invest in a Retirement Plan and Insure your Worth
As with career employees, you will want to ensure that you invest in a retirement plan, life insurance and even personal disability insurance – all of which will protect you and your family when it’s time, forcibly or not, to step away from your business.
It’s relatively easy to address retirement planning, because we all hope to get there and, more importantly, want to enjoy it. But life and disability insurance are equally important for the small business owners, because they protect you and your family, should the worst happen. H
Here are some tips for finding the right plans for you and your business:
• Finding the Right Retirement Plan – If you are a sole proprietor then you may want to talk to your bank about a setting up an IRA or other retirement solution. If you have employees, on the other hand, setting up a small business retirement plan for both you and your employees needn’t be that difficult – and also offers a nice tax deduction.
• Disability and Life Insurance Options – While some states require employers to provide partial wage replacement insurance coverage to their eligible employees for non-work related sickness or injury, most businesses opt to provide both disability and life insurance as part of an overall compensation or benefits plan.
The Process of Exiting Your Business
Whether you are selling your business, transferring ownership, seeking retirement, or facing a “forced-exit” such as bankruptcy or liquidation – planning your exit is a big undertaking that has implications on employees, your business structure, its assets, and your tax obligation. Before you embark on your exit strategy, be sure to contact your attorney and even a business valuation expert. That way, you will be sure that you have explored all the options available to you.
If you have any questions about an exit strategy for your small business, contact our office today.
Source: Small Business Administration http://www.sba.gov
If you have questions about starting, growing, protecting, understanding business taxes, or selling your small business, please contact us. As a CPA, Certified Business Advisor, Small Business Consultant, Certified Business Profit Consultant, and Advanced Certified QuickBooks ProAdvisor, we specialize in working with small business owners and provide tax, accounting, financial analysis, business planning, and small business advisory services. For more information, call (727) 391-7373 or else visit us on the web at http://www.LindaStortzCPA.com.