2 min read
2 ways to transfer a family business
For many people, a family-owned business is their primary source of wealth, so it’s critical to plan carefully for the transition of ownership from...
Business owners accumulate a significant portion of their wealth in the business they have spent building for many years. If the owner would like to realize the wealth inside their business, they generally have three options: 1) sell to an unrelated third party, (2) sell to present management, or (3) transfer to their children. Utilization of an Employee Stock Ownership Plan (ESOP) provides multiple benefits such as possible continued deferral of tax on the accumulated business wealth, and a transaction that is planned with the owner’s timing and control.
The advantages of this type of transaction can be possible tax deferral, tax deduction to the business, and continuity in management to enhance the company’s success. Characteristics of businesses that enhance this type of transaction are (1) profitable, (2) good cash flow, (3) consistent earnings, (4) significant payroll and (5) management capability. Please contact us at 1-866-287-9604 if you would like to explore this option further for your business.
Posted by Myron Fisher, CPA, CGMA
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