succession planning - Linkenheimer LLP CPAs & Advisors

Family Businesses Need Succession Plans, Too

Those who run family-owned businesses often underestimate the need for a succession plan. After all, they say, we’re a family business — there will always be a family member here to keep the company going and no one will stand in the way.

Not necessarily. In one all-too-common scenario, two of the owner’s children inherit the business and, while one wants to keep the business in the family, the other is eager to sell. Such conflicts can erupt into open combat between heirs and even destroy the company. So, it’s important for you, as a family business owner, to create a formal succession plan — and to communicate it well before it’s needed.

Talk it out

A good succession plan addresses the death, incapacity or retirement of an owner. It answers questions now about future ownership and any potential sale so that successors don’t have to scramble during what can be an emotionally traumatic time.

The […]

By Linkenheimer LLP|2018-12-13T22:49:56+00:00December 13th, 2018|business, planning, succession planning|0 Comments

An FLP Can Save Tax in a Family Business Succession

One of the biggest concerns for family business owners is succession planning — transferring ownership and control of the company to the next generation. Often, the best time tax-wise to start transferring ownership is long before the owner is ready to give up control of the business.

A family limited partnership (FLP) can help owners enjoy the tax benefits of gradually transferring ownership yet allow them to retain control of the business.

How it works

To establish an FLP, you transfer your ownership interests to a partnership in exchange for both general and limited partnership interests. You then transfer limited partnership interests to your children.

You retain the general partnership interest, which may be as little as 1% of the assets. But as general partner, you can still run day-to-day operations and make business decisions.

Tax benefits

As you transfer the FLP […]

By Linkenheimer LLP|2020-09-03T20:04:30+00:00August 13th, 2018|child, estate, New Tax Laws, small business, succession planning, tax planning|0 Comments

Could a Long-Term Deal Ease Your Succession Planning Woes?

Some business owners — particularly those who founded their companies — may find it hard to give up control to a successor. Maybe you just can’t identify the right person internally to fill your shoes. While retirement isn’t in your immediate future, you know you must eventually step down.

One potential solution is to find an outside buyer for your company and undertake a long-term deal to gradually cede control to them. Going this route can enable a transition to proceed at a more manageable pace.

Time and capital

For privately held businesses, long-term deals typically begin with the business owner selling a minority stake to a potential buyer. This initiates a tryout period to assess the two companies’ compatibility. The parties may sign an agreement in which the minority stakeholder has the option to offer a takeover bid after a specified period.

Beyond clearing a path for your succession plan, the deal also may provide needed capital. You can use the cash infusion from selling a minority stake to fund improvements such as:

Hiring additional staff,
Paying down debt,
Conducting research and development, or
Expanding your facilities.

Any or all of these things can help grow your company’s market share and improve […]

By Linkenheimer LLP|2020-09-03T20:04:38+00:00June 7th, 2018|planning, succession planning|0 Comments

A Parents Best Intentions

By Linkenheimer LLP|2020-09-03T20:06:00+00:00September 25th, 2012|agreement, CPA, generation, Linkenheimer, mediation, Santa Rosa, succession planning|0 Comments