Calculating Your Federal Income Taxes

Posted on: 16 June 2021

Do you need to do succession planning for your small, closely-held business? Many owners struggle to master all the elements involved in planning what will happen to their business when they can't or no longer want to run it. One person that can help your small business is an outside consultant. Should you hire a business consultant to aid with succession planning? Here are a few indicators it's a good idea.

1. When Taxes Are Significant

Selling or transferring your business could bring a slew of tax issues for both the buyer and seller. If you have accumulated significant equity in your business interest, for instance, selling it to another party may trigger taxes on a huge portion of that value. There are ways to minimize taxes, but these take advanced planning and knowledge to choose from. 

2. When You're Too Busy

Most small business owner-operators are already knee-deep in running their company when the time comes for succession planning. If you can't devote yourself to the subject, or learn as you go, for up to five or ten years, you need outside help that can do some of the work.

3. When You Have a Deadline

Proper succession planning can easily take five to ten years. But not everyone has the luxury of time on their side. Whether you have a health issue that makes running the business difficult or you want to retire early, you may need to get all your planning done in much less time than normal. For this, you need an expert who can streamline the process, keep it moving forward, and take on the workload. 

4. When You Don't Have Successors

Some family businesses know who will take over, but others don't have a clear go-to person. If you're in the latter category, a consultant will help you sift through the options and select possible candidates or avenues to take. Each potential type of outside successor, from your head manager to a sale to an outside company, will require a different type of targeted planning. 

5. When the Business Needs Help

One important part of succession planning is ensuring the business is ready to be handed over. How ready is your small operation to have its keys handed to an outside individual? Many small companies need help cleaning up their accounting, managerial practices, liability protection, cash flow, and other issues. A good consultant will get the business ready no matter who will take it over. 

Does your family business fall into any of these situations? If so, a business consultant could be the best investment you can make right now. With their help, the company you worked hard to create will craft a path forward that will keep it thriving for many years to come.