Prior Proper Planning Prevents Poor Performance, or however you remember the 6 P rule, is critical in this situation.
Whether it is the family farm, a retail business, or any type of business for that matter, getting good advice can save a lot of money and a lot of heartache.
There are many issues that can jump up to bite you or your loved ones, even many years after the changeover.
More immediate are the Capital Gains Tax issues. Do you qualify for Small Business CGT Concessions? What about profit on disposal of stock and equipment? Even if no money changes hands this can still be substantial.
Have you considered other family members? How is your estate plan affected? Even before you are gone, families can often tear themselves apart when all the consequences of a family business transfer are not considered.
How do you plan to fund your retirement now you can no longer rely on the family business? Centrelink? Super? Support from the kids? You need to make sure you are comfortable with how you will live out your days. You’ve worked long and hard, and have earned a comfortable retirement.
Access to a Centrelink age pension after the changeover is often within reach, even if you wouldn’t normally think so. But there are also plenty of instances of people being locked out of a pension for years because the transaction wasn’t structured correctly.
Does the next generation have the skills to keep the business going? You may have a good handle on not spending beyond the means of the business, but managing cashflow can be a difficult skill to obtain for the next generation.
The whole process of succession planning raises a lot of questions. Many more questions than what we have discussed here. The answers will be unique to your family situation.
Burnett Business Centre regularly helps families transfer their business to the next generation. Take advantage of our experience – call us today.