You’ve worked practically nonstop since starting your business to get to where you are today. The sacrifices you’ve made—sacrifices to your social life, mental well-being, and most likely your physical health—have been difficult, but they were totally worth it, right? If given a choice, most business owners would want to protect the product of their labor in the event that something happens to them. To do that, you need a business succession plan.
But how do you create a business succession plan? Well, that depends on your wishes and your business.
As you no doubt already know, there are a few different ways to structure your business. If you don’t have a business succession plan, your business structure will determine what happens when you pass away:
- Sole proprietorship: liquidation of business assets.
- Corporation: because the estate owns the business, your successor will need to go through an attorney to spend any money on payroll or to pay bills, for example.
- LLC: many states will liquidate the assets of an LLC following the death of the owner.
- Partnership: when one partner dies, unless there is an agreement in place, the partnership must wrap up any activities and the partnership must be dissolved.
It’s plain to see that without a company succession plan, your business doesn’t stand much of a chance. Even in the case of corporations, your successor will have trouble managing simple day-to-day tasks.
So, now that you know that you need a plan for your business after you’re gone, here’s what you need to consider when planning:
Who Will Succeed You?
Let’s say Stanley, who owns Stanley’s Sherbet Shoppe, decides he wants to create a plan for when he’s no longer there to run the store. The first thing that Stanley would want to do is decide who will succeed him. Since his son, Steve, has been learning about the business and working for Stanley for the past few years, Stanley names him as the successor. Naming him the successor in the proper legal documents will ensure that Steve doesn’t have any problems.
While many business owners choose family members to keep the business running, it doesn’t have to be family.
Properly Documenting Your Business Succession Plan
Unless you have legal training, it’s not very likely that you know the proper way to name a successor to your business. That means that you need to sit down with an attorney as soon as possible to keep your business up and running, even if you’re not there to take care of things. A business attorney will know the proper way to document your business succession plan, taking into account your desires and your business’s structure. Once you have a succession plan in place, you can stop worrying and start focusing on actually running your business.
You worked hard to build your business. A simple step can build your legacy. Call Casal & Moreno today at 786-465-6728.