New Year, Fresh Start: Business Succession Planning

As the New Year begins, life can be unexpected, and one year can be completely different than the last. Which is why, now is a perfect time to assess your lifetime and estate planning goals. Are you a business owner? And if so, is your succession plan current with any changes that may have occurred in your life? Reviewing and revising your plan to reflect your overall objectives, will ultimately benefit both you, your loved ones, and your business.

When taking steps towards proper Business Succession Planning, consider these essential documents:

A Buy-Sell Agreement

Business continuity is so important especially when there are multiple partners involved in running a business. A Buy Sell agreement is designed to assist partners in managing potentially difficult situations in a way that protects the business and a partners own personal and family interest. A Buy Sell is a legal contract that establishes a clear plan on how to transition the ownership should a key partner decide to retire, become incapacitated or pass away. Often times, life insurance is a component of this agreement to fund the buyout of a business from a deceased partner’s estate.

Deferred Compensation Plan

A Deferred Compensation Plan allows for a portion of an employee’s compensation to be paid at a later date, typically when the employee retires. The benefit of these plans is to help reduce taxable income since the employee is not taxed until they receive the distribution from the plan. Employers utilize these types of plans as an incentive to retain key employees that are essential in maintaining and operating their business.

Premium Financing

Financing allows businesses to acquire insurance on the company and/or their key employees without having to significantly impact their cash flow to cover the expense of the premium payment. Financing the majority of the upfront cost of an insurance policy frees up capital which allows a business owner to focus on product development, hiring employees, marketing efforts and other resources needed to grow their business.

It is so important to take the time to document your intentions regarding your financial and physical well-being to ensure that whatever life may throw your way, you and your family will be taken care of.