The importance of business succession planning
The importance of business succession planning was brought into sharp focus recently, with the release of some startling statistics.
A survey of 837 SME business owners by asset management firm Close Brothers revealed that although 63 percent planned to pass on their business to a close family member when they retire, almost half of them have no strategy in place to extract profit from the company at that time.
Figures showed that 13 percent of the business owners have not even yet considered succession plans, whilst 45 percent had no idea how to take profit from the business from which to fund their retirement. 8 percent of those surveyed said that they didn’t understand the process at all.
Estate planning is vital for anyone who has assets to pass on, but particularly so when the family business is viewed as a pension fund. In order to allocate revenue for retirement yet still have a source of revenue to pass onto the next generation, it is essential that a business succession plan is put in place. To avoid doing so runs the risk of the majority of profit being handed over to the tax man in the form of inheritance tax.