PROBLEMS THAT FAMILY BUSINESSES ENCOUNTER WITH SUCCESSION

Family businesses succession

Family businesses succession

Introduction

Business succession planning should be priority for each of family business. Sooner or later, everyone wants to retire. But if you have the family business, retirement is not only the matter of decision not to go into Office in any other. In addition to ensuring that you have enough money to retire, whole issue of what's going on with business becomes paramount. Who will manage business, when you no longer wish to operate business? As property is passed? Whether your business is carried out or are you going to sell? (Chakrabarty 2009 1)

Business succession planning seeks to address these issues, creating the smooth transition between you and future business owners. Family business succession planning can be especially difficult because of attitudes and emotions involved and because most people are not so comfortable discussing topics such as aging, death, and their financial affairs. Perhaps this is why more than 70 percent of family businesses do not survive transition from founder of second generation. In most cases, "assassin" is the tax or family breakdown issues, good family business succession plan will cover (Rothwell 2001 14).

Think about business planning for succession, divided into three main issues, management, ownership, and taxes.

It is important to understand that management and ownership are not necessarily same thing. You can decide, for example, to transfer control of your business to only one of their children, but transfer equal shares of business ownership to all your children, they are actively involved in running the business or not (Mahler 1973 11).

Tax planning component looks to minimize taxes continuity in event of death. There is the transfer of assets tax strategies that will help you in this, such as freezing of cost of your interest in company at time of transfer of ownership of your children (Deans 2008 2). By reorganizing your corporation to exchange their common shares in business of preferred shares with the fixed value equal to value of common shares, you can send all future capital gains or income tax liability that in future thanks to your children while you retain control and access to current value of business, because of freezing of Corporation. Accountants and lawyers who specialize in business continuity planning can provide valuable advice on tax strategies. For many enterprises, family is main focus of succession planning. If you think about future management of your business, as property is transferred or taxes, you can't help but think about how your decisions affect your family (Alderson 2009 3).

On next page of this article provides six tips to make succession planning less painful and more successful for your family business.You delayed succession planning? Use these tips for family business succession planning for succession planning process and ensure the smooth transition from one generation to another (Mahler 1973 11).

1) Start of business continuity planning early.

Five years is the good thing. Ten years ahead, better. Many consultants business say beginners to create right exit strategy to their business ...