A business has a life cycle, and a good business attorney can assist with customizing business planning strategies that align with your goals at different points along the way. It is important to address the needs and objectives of your company at certain milestones, transitional periods, or levels of growth. At the same time, you must recognize that unexpected events, uncertainty, and threats put your interests at risk.
Done properly, you can also take advantage of tax treatment that benefits you, your business, and the individuals who follow in your shoes. Some tools for achieving your goals include:
Buy-Sell Agreements: Businesses with multiple stakeholders should consider appropriate strategies for moving forward when one owner dies, becomes incapacitated, or wants to exit the organization. A buy-sell agreement is an effective method for handling the transition, especially when you do not want the departing individual’s interest to become controlled by the estate, heirs, or a buyer who is a stranger to the company. Buy-sell agreements provide a roadmap for transition and keeping ownership interests within the fold of the business and/or remaining stakeholders.
Key Person Planning: There are many reasons one particular employee or stakeholder may be critical to your business success, such as having specialized knowledge, business relationships, or contributions to reputation and goodwill. Losing this person can shatter your company, but key person planning can help you avoid or plan for the devastating implications.
Incapacitation Planning: Illness, injury, and other medical conditions can make it difficult or impossible for a business owner or stakeholder to perform the tasks necessary to meet the organization’s objectives. With incapacitation planning, you have a protocol that enables another person to step in and manage important company operations upon certain trigger events. Without it, the individual appointed as guardian or power of attorney in charge of the disabled person would also have control over your business affairs.
Business Succession Planning: Eventually want to exit your business. How will you do it? It is important you prepare your business to continue after you are gone. Effective business succession planning ensures you have control over who will take on company affairs, rather than having your interest pass to heirs or others who may not be as dedicated to it as you. Business succession planning is often incorporated into an estate plan through will, trusts, and other tools. In addition, business succession planning ensures you can plan for the next generation of stakeholders and ensure they have the necessary tools to take over running the business while you are still around to oversee the process.