New Jersey business owners often deal with more complex matters of estate planning. You not only have your personal finances and assets to manage, but those of the business as well.
This means part of your estate plan must handle matters of business after your death. This starts with basics and goes all the way to the finer details. One of the points you will start off at is transferring your business.
Looking at your options
Fit Small Business tackles the ever-important matter of business succession planning. The first place you should start is your base plan for transferring the business. There are several options here, which include:
- Striking up a buy-sell agreement with a key employee or co-owner
- Passing your business on to an heir, usually a family member
- Selling your company to an outside party
- Selling your share back to the company
Comparing risk and reward
Each has its benefits and drawbacks. For example, a buy-sell agreement puts a good amount of financial pressure on the key employee or co-owner. But this way, you ensure that your business is going to good hands. After all, this person has likely worked in your company for many years and knows its ins and outs. You have a good idea of how they will run things and you can entrust your vision to them.
On the other side is selling your company to another party or selling your share back. This reduces financial pressure, but you have no say over who buys the business. This means you cannot guarantee they will hold up your vision or values.
Finally there is passing it on to an heir. Many successful family businesses do this. But you cannot guarantee a family member will have interest in inheriting the business. You also cannot predict any familial fallout that may happen during inheritance disputes.