Wanting to keep a business within the family tradition can be a big goal for you as a business owner. You want your legacy to continue whilst also providing a profitable future for your family and whoever takes over from you when you pass away. Even if further down the line the property does eventually get sold, you want to make sure that that you can maximise its value as much as possible in the meantime. Here are some valuable tips to benefit you, your business and your family’s future.
Make sure your business is protected
The faces of a business are just as important as the brand of the business alone. In which case, if any of you or your partners were to pass away it can have a detrimental effect on the value of the company. Therefore it’s worth making sure the relevant parties are covered with a life insurance policy that can protect your company when you die. It can be something that the business can fall back on to pay off outstanding debts or buy time if the business goes into liquidation. The best way to do this making it aware in your will. If you’re unsure how to do this there are will writing solicitors available to help with this.
Put a buy-sell agreement in place
There is also an option available in order to protect the survival of your business. There’s something called a buy-sell agreement where in simple terms, the relevant parties within the business must exchange the stake that the owner has in exchange for cash if they were to pass, retire or any other reason to part the company. They can then use this to allow the remaining beneficiaries to continue operations. In essence, the buy-sell agreement protects your family and also your business in the long run without any stress in the long run. If you own a small business this is also crucial to set in place as if it’s not managed properly, it can be an extremely large burden on your family from a financial point of view.
Prevent tensions within your family
Although you’d hope that money wasn’t an issue for your family when you pass, when it comes to inheritance of assets or money it can create tension between family members. You can help to prevent this by splitting assets between them. This all depends on how you run your business of course, but maybe not all family members are involved within your business so it’s important to cover both the active and inactive members of the company and your family. The life insurances proceeds can be passed on to those who aren’t involved in the business, leaving those active within the business to continue control of the company and leaving everyone covered.
Keep assets aside from your company
With the income you receive from the business, you can accumulate that separately from your main business assets. Life insurance policies for example tend to be used by business owners as a way of looking to the future by accumulating cash to be used as a retirement fund. There are different options of insurance policies which have benefits tied to death and tax advantages which can help the transition of the business to the younger generation and keep important employees.
Being a business owner, you’ve spent a considerable amount of your lifetime building your company from the bottom up. For the all hard work to crash and burn would be a shame, so consider the options available to you so that your business can be passed on smoothly and continue it’s running operation.