Running a business in Leesburg can leave little time to think about who will take over when you step away. Yet an unexpected illness can force that question sooner than you expect. A Leesburg business lawyer can help you begin a plan that fits your company and your family.
You can start even if retirement is years away. A succession plan can address a planned handoff and a sudden interruption in your ability to work.
What do you want the next stage to look like?
Start with your own goals. You may want to retire completely or keep a smaller role while someone else takes charge. Consider whether income from the business will help pay your living expenses.
Then think about what you want for the company. Keeping it in the family may be your first choice, but that approach only works if someone is willing and able to lead. Selling to an employee or an outside buyer may be another path.
Who is ready to take over?
Talk with possible successors before building the plan around them. A child who enjoys helping occasionally may not want to run the company. A reliable employee may need time to learn how to manage its finances.
Owning a share of the business and handling daily work are different roles. Decide who should make decisions and what training that person needs. Set a schedule for handing over responsibilities while you’re available to answer questions. Give the successor a chance to handle supplier calls or lead client meetings while you’re still involved.
What do your current documents allow?
Review the agreements that govern your business before promising anyone an ownership share. An LLC operating agreement may restrict transfers or require approval from other owners. Corporations may have stock transfer restrictions that also need review.
In Virginia, receiving an LLC interest doesn’t necessarily give someone the right to manage the company. A Leesburg business lawyer can review the transfer terms and explain which approvals your plan needs.
Review leases and customer contracts for consent requirements, too. If the business needs a license, check whether a new owner must apply or update the existing registration.
A buy-sell agreement can spell out what happens when an owner leaves or dies. It can also set a process for pricing the departing owner’s share.
How will the handoff be paid for?
An ownership transfer needs a realistic financial plan. Have a qualified professional assess the business’s value using current records. An estimate based only on what you’ve invested may not reflect what a buyer will pay.
Consider how the buyer could fund the purchase and when you would receive payment. If payments continue over several years, review how that affects your income and what happens if payments stop. Check existing loan terms and any personal guarantees before agreeing to a deal.
A sale and a gift can produce different tax results. Talk with a tax adviser before choosing how to transfer ownership.
What happens if you can’t work?
Choose who should keep the business running during an unexpected absence. Confirm that the person has the legal authority needed for the tasks you expect them to handle. Set up bank access that matches that person’s authority.
Write down how to find essential records and contact the people who support the business. Make sure someone authorized can handle payroll and pay bills. Store access instructions securely.
Coordinate the business plan with your will or trust. Your estate documents can address who receives your business interest, while company agreements can affect the rights that come with it.
How can you get started?
Gather your business agreements and recent financial records for an initial review. Bring notes about your goals and anyone you’re considering as a successor. You can then identify what needs attention first and set dates for the next steps.
Revisit the plan when ownership or family circumstances change. As the business grows, its needs may change too.
Call Brandon Davis, Esq. at (540) 425-8278 or complete the online form to speak with a Leesburg business lawyer about starting your succession plan. A review can help you understand your options and put your wishes into workable documents.
