When the time comes that you're ready for retirement, there are a number of different options for exiting your business. Often the way in which you exit your business will depend upon the business structure and whether or not your input is a crucial element in the continued operation of the business.
The following are just some of the possible business exit scenarios that you may consider:
Succession and passing your business along to family members - This may seem like a simple choice, but in fact handing a business over to a family member or your children can be more complicated than it seems. To manage this effectively, you need to seek assistance in determining how much of your capital will remain with the business, you must put an effective tax management strategy in place and you must determine if you will hand over some or all of your control of the business. You may wish to retain some control through a company and shareholding structure, or you may wish to set up a family trust to manage the transition of the business and the control of the company.
Winding up your business - Often this is a logical choice if the enterprise relies heavily upon your individual labour or output (eg. If you're a tradesperson) and there is no family member to succeed you or no interest from a potential buyer. The key issues that need to be addressed in this scenario are that any monies owed are paid and any capital is obtained from business assets. Money realised from assets will be a part of your retirement income and it is worth seeking advice from an expert to ensure you minimise any tax owing, while retaining as much as possible for your retirement.
Selling the business to a third party - When you sell a business to a third party, you should seek assistance to ensure you preserve any monetary gains and minimise your tax bill. This will ensure you have more money going into your retirement income or available for investment in other income generating opportunities.
Selling to co-owners or business partners - If you've established a successful business with other parties, then the sale of your portion of the business to those third parties may be the logical choice. You may wish to make arrangements for your portion of the business to be transferred to other stakeholders and include this in the partnership agreements you have in place. Seeking advice on how to construct an agreement that is acceptable and beneficial for all parties can be the best way to manage this, thereby ensuring that everyone's interests are protected by the agreement.
Other options are also open to business owners and these can be explored if they are more suitable for your particular business. When you make plans for a pending retirement or exiting your business, the right advice can be essential to ensure that you've covered all the necessary arrangements.
If you'd like to find out more about exiting your business, then I can discuss this with you and help you make suitable plans for your retirement. Please arrange a consultation to discuss and assess your business exit needs.
