2 Reasons to Hire a Professional Advisor When Passing Down Your Company

If your business is going to stay in the family, it might not be a smooth transition. Unwritten procedures and invisible policies might not translate over to the next owner. Tax issues and financial problems can severely reduce the business’s profitability during the transition. Even family dynamics and personal conflicts can start to get in the way of business operations. Bring a professional in for key steps to keep the transition smooth.

How can a professional advisor help?

Any time you’re making a major change to your business, it’s worth bringing in a professional. Expanding your business can bring new licensure requirements, changing the business model can bring new liabilities, and mixing both inheritance and business involves a lot of technicalities. An advisor can help because:

The sale needs to be the best arrangement for everyone’s finances, especially your’s.

How you sell your company has a large effect on your personal finances. A sudden gain in income raises your tax rate. How your child or the next owner finances their payment matters. Even whether you arrange the transfer as a sale or a gift has tax implications, and you could be audited to ensure it was sold at fair market value instead of at a deliberate discount. Professionals know how to organize the transfer, whether it’s immediate or over the course of several years.

A professional can outline hard truths without causing bad feelings.

Family politics find their way into every family business. Sometimes family members you love aren’t the best choice for your replacement. An advisor can help you find the best candidate for long-term success based on their credentials and experience. They are also a neutral party who can explain official documents and couch unpopular decisions in legitimate business terms. While honesty is important in family businesses, sometimes it helps to have an outsider as the bad guy.

If you want to start organizing your exit strategy and planning out your financial transitions over several years, go to HCMM, Inc. We can help you create a solid strategy.

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