How to prepare for business succession
The pandemic and lockdowns would have had many businesses considering the future and what may happen if they become ill or incapacitated or what happens to their business after they retire or the unexpected happens.
It could be that if you are in a partnership, you let a partner take full control or pass ownership to younger members of the family.
Planning is crucial to make sure the business you have worked hard at creating is in safe hands when the time comes.
Making a will is a necessity because if you or your business partner die, having a will in place makes sure that the business assets and shares are managed in the right way.
What you should do:
Be clear about the future
Revisit your business plan to see how you’re performing against your goals and ambitions and whether your successor can be trusted and is capable of taking your business forward. If it is a limited company, new directors should be appointed before you step down.
Get the right people on board
If not an established partner, you will want someone with the necessary skills and similar experience. Current employees with continued training and mentoring will continue to provide a solid base for the new setup.
Let the relevant authorities know
You’ll also need to tell Companies House about any changes in directors within the business
Do not fall foul of tax liabilities
If you’re VAT registered, you may be able to transfer registration to the new owner. You may also need to sell any shares if you’re in a business partnership.
Selling or changing ownership of a company can produce complicated tax issues. So always seek professional advice.
Other key steps which need to be considered to take when preparing for business succession include:
- The structure of the business
- The need for Business Power of Attorney
- The necessity for option agreements
- What happens with shareholder disputes
Need help with selling or passing on your business? Contact us today.
