• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Skip to footer

The Potter Law Firm

North Carolina and Kentucky Estate Planning Attorneys

phone iconNC (704) 944-3245
KY (606) 324-5516
Attend A Free Seminar - KY Attend A Free Webinar - NC/SC THIS IS AN ADVERTISEMENT

  • Home
  • About Us
    • About Our Firm
    • Attorney and Staff Profiles
  • Practice Areas
    • Asset Protection & Business Planning
    • Elder Law & Medicaid Services
    • Estate and Gift Tax Figures
    • Family-Owned Businesses & Farms
    • Incapacity Planning
    • IRA & Retirement Planning
    • Legacy Planning
    • Pet Planning
    • Probate
    • SECURE Act
    • Special Needs Planning
    • Trust Administration
  • Elder Law
    • Coping With Alzheimer’s
    • Emergency Medicaid & Nursing Home Planning
    • Guardianship & Conservatorship
    • Hospice Care
    • Medicaid Planning
    • Nursing Home Planning
    • Veterans Benefits
  • Communities We Serve
    • Kentucky
      • Boyd County
        • Ashland
        • Florence
      • Kenton County
        • Covington
        • Fort Mitchell
        • Independence
    • North Carolina
      • Mecklenburg County
        • Charlotte
        • Davidson
        • Huntersville
  • Resources
    • Definitions
    • DocuBank
    • Elder Law
      • Elder Law Links
      • Elder Law Reports
      • Local Elder Law Resources
        • Ashland Elder Resources
        • Covington Senior Resources
        • Huntersville Elder Law Resources
        • Independence Senior Resources
    • Elder Law Reports
    • Emergency Legal Documents
    • Free Estate Planning Seminars
    • Free Estate Planning Worksheet
    • Frequently Asked Questions
      • Estate Planning
      • Frequently Asked Questions for Families Without an Estate Plan
      • IRA & Retirement Planning
      • Legacy Wealth Planning
      • LGBTQ Estate Planning
      • Medicaid
      • Pet Planning
      • Trust Administration & Probate
    • Is Your Estate Plan Outdated?
    • Kentucky Probate Resources
      • Ashland, Kentucky Probate Resources
    • Newsletters
    • North Carolina Probate Resources
      • Huntersville, NC Probate Resources
    • Reports
      • Advanced Estate Planning
      • Basic Estate Planning
      • Elder Law Reports
      • Estate Planning for Niches
      • Trust Administration
  • Contact Us
  • BLOG
Home » taxes » Business Succession Plan

Business Succession Plan

June 12, 2017 by John Potter

If you have made the leap from gaining experience in a job to starting your own company, then you understand the importance of protecting that business. Every small business needs to have a business succession plan.

Understanding the Purpose of a Business Succession Plan

Just as an estate plan provides a way to protect your assets from creditors and taxes, a business succession plan provides a way to ensure that your business assets are protected.  A business succession plan also provides a way for the management of your business to be transferred to whomever you choose once you retire, or upon your death.

Business succession planning helps to protect your legacy

If you want to be sure that the legacy of your family-owned business will be passed down to the next generation, it is crucial that you plan for the succession of your business.  The only way to do this properly is to create a comprehensive business succession plan and put that plan into effect as soon as possible.

The undeniable benefits of having a business succession plan

At some point, you will start thinking about retiring from managing your business.  A common misconception is that retiring from your own business is the same as retiring from a position at someone else’s business.  The reality is, you cannot simply turn in a letter of resignation and settle down to enjoying your golden years. With business ownership comes the need to take steps to leave your business in capable hands.

Nevertheless, most businesses do not have a succession plan that will address the issues that arise when it is time to transfer management of a business to someone else. This is true even though the majority of business owners have full intentions of passing on the business to the next generation. Yet, less than half of all small business owners have an effective plan in place.

Basic elements that should be included in your business succession plan

A comprehensive and effective business succession plan should focus on three primary issues: ownership, continuation of management, and business taxes. Many business owners share the mistaken belief that management and ownership of a business are the same concepts, when in fact they are not.

Although you have the option of transferring ownership of your business to all of your children, in reality, you may only want to leave the management of the business to only one of your children.  It is very common for most families that not all of the children or grandchildren will actually be willing or capable of managing the business. In fact, not everyone will want to actively participate in the operation of the business.

The need to plan for business taxes cannot be overlooked

One of the most important components of business planning is addressing tax liability and how that liability can be minimized during the succession of the business to new management. The goal is to reduce the tax burden that will be imposed on your estate as a result of your business interest. However, with the right business planning strategies, you can use certain small businesses tax credits to help minimize any tax consequences.

Ways to minimize taxes during the transfer of your business

There are various ways to transfer a business. For example, you can conduct an outright sale, buy-sell agreements, installment sale agreement, or outright gifts.  All of these strategies have their own tax consequences which need to be carefully considered.  Some of the most common strategies include valuation discounts, irrevocable life insurance trusts and the election to defer payment of estate taxes when it comes to closely-held businesses.

If you have questions regarding business succession planning or any other estate planning needs, please contact the experienced attorneys at the Potter Law Firm for a consultation, either online or by calling us at (704) 944-3245 (Charlotte, NC), (606) 324-5516 (Ashland, KY), or (859) 372-6655 (Florence, KY)..

  • Author
  • Recent Posts
John Potter
Latest posts by John Potter (see all)
  • What You Need to Know about the Medicaid Look-Back Rule - January 3, 2023
  • How to Pass Down Your Legacy in Your Estate Plan - October 3, 2022
  • Practical Steps to Take after Receiving a Terminal Diagnosis - September 30, 2022

Filed Under: Business Law

Other Articles You May Find Useful

The Potter Law Firm
Why Considering an LLC is a Good Idea

Free Estate Planning Worksheet

There's a lot that goes into setting up a comprehensive estate plan, but with our FREE worksheet, you'll be one step closer to getting yourself and your family on the path to a secure and happy future.

Texting Permission

Follow Us

  • Facebook
  • Instagram
  • LinkedIn
  • RSS
  • Twitter
  • YouTube

Subscribe to Our Blog

  • This field is for validation purposes and should be left unchanged.

Testimonials

default image

Overall The Potter Firm was very professional. They took what could of been a very complicated process and were able to break it down so it was a lot easier to understand. We are confident we now have made the right decisions in our estate planning. Good firm to work with.

DKS & KMS Client Review August 28, 2020

default image

John Potter has been a real pleasure to work with. He is very knowledgeable and explains things in a very simplistic manner so the average person can understand how/why the laws are written. He is very attentive and asks questions in such a way that not only helps him understand your goals, but also helps you think about what type of goals and expectations you should be considering. Exemplary client service.

David J. Client Review August 28, 2020

default image

My husband and I selected Ms. Potter to assist with our small business. She responsive and attentive every time I have a question or need assistance, and is extremely knowledgeable and able to answer any legal question I have had. I know I can count on Ms. Potter for all of my business legal needs and I would highly recommend her to anyone needing legal assistance with such.

Jillian Client Review August 28, 2020

<< Prev
Next >>

Where We Are

Ashland

ASHLAND
1620 Carter Avenue
Ashland, KY 41101-7631
Phone: (606) 324-5516
Fax: (606) 324-4766

Charlotte

CHARLOTTE
15720 Brixham Hill Avenue
Suite 300,
Charlotte, NC 28277
Phone: (704) 944-3245

Huntersville

HUNTERSVILLE
11330 Vanstory Drive
Huntersville, NC 28078
Phone: (704) 944-3245

Northern Kentucky

NORTHERN KENTUCKY
7310 Turfway Road
Suite 550,
Florence, KY 41042
Phone: (859) 372-6655

Office Hours

Monday8:30 AM - 4:30 PM
Tuesday8:30 AM - 4:30 PM
Wednesday8:30 AM - 4:30 PM
Thursday8:30 AM - 4:30 PM
Friday8:30 AM - 3:00 PM

Map/Location

potter_sidbr_map
potter law logo
  • Facebook
  • Instagram
  • LinkedIn
  • RSS
  • Twitter
  • YouTube

The information on this website is for general information purposes only. Nothing on this or associated pages, documents, comments, answers, emails, or other communications should be taken as legal advice for any individual case or situation. The information on this website is not intended to create, and receipt or viewing of this information does not constitute, an attorney-client relationship.

Privacy Policy | Terms of Service | Disclaimer | Site Map | Powered by American Academy of Estate Planning Attorneys

© 2023 American Academy of Estate Planning Attorneys, Inc. THIS IS AN ADVERTISEMENT