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business succession why

Business Succession Planning: Why is it Important?

You may know what business succession planning is but do you know why it’s important?

It’s January 5th and I get a call from a client who wants to sell their business. They had a great holiday break and decided they no longer want to run their business. They do not want to deal with the headaches, stress, and people issues that accompany being a business owner. As their business advisor, I make the following statements and ask a few important questions:

  • Have you met with your financial planner to see if you have enough to retire?
  • Do you know what your business is worth?
  • Your business had a really bad year 2 years ago. Remember, almost all buyers will look back 3 years. This will hurt the value in the sale.
  • Does your executive team know?
  • Have you thought about incentivizing them to stay with the buyer?
  • What are you going to do next?
  • Most buyers of businesses your size, will use a loan to buy the business, and will require you to be out of the business in less than a year.

The list continues during the next few discussions with the client. It’s clear they have not thought of any of these, however they want to sell anyway. During the process, the valuation is lowered by the bad year they had, and a few members of the management team leave as they hear of the sale. The transaction closes after months of trying to sell and going through due diligence with a couple different buyers.

This scenario happens every year. Business succession plans help make sure that if you wake up on January 5 and decide to sell, you have the opportunity to easily answer these questions and many more. Having a plan in place will help you maximize the exit value when the times comes, and also make the process of selling or transitioning much easier for the business.

Contact us for a no-cost consultation to find out if your business is ready to be sold.

resources

Resources for Small Business News

Are you a small business owner without go-to resources for your business news? It is important to stay on top of industry updates, events, and ideas that may impact your small business. However, we know that running a small business is no easy feat. When you have five extra minutes, you do not want to spend them sifting through news outlets, deciding what is trustworthy and worth reading.

In order to help with this, we are sharing a blog post by Meredith Wood of Fundera. Meredith provides readers with an organized list of resources including websites, blogs, and social media pages to follow. When utilizing this list, business owners will save time and have easy access to helpful advice and information.The list provided includes sources that will share the latest news and updates in capital expenses, loans, budgeting, forecasting, marketing, social media, taxes, HR issues, government standards, etc.

For example, one of our favorite suggestions in the list is New York Times: Entrepreneurship & Your Taxes. The New York Times is common reading material for most people but the particular sections Meredith mentions, we find important. The first one being Entrepreneurship and the second being Your Taxes. Both of these sections highlight subjects like small business tax, healthcare reform, and credit scores.

Click here for the 37 Best Resources For Small Business News

IRS Business Owners

Interacting with the IRS: New Business Owners

Did you start or acquire a new business this year? If so, you may feel a little overwhelmed with the new responsibilities and you could be a little intimidated interacting with the IRS for the first time. The first thing you should do as a new business owner is get a tax ID number or Employer Identification Number (EIN). You can apply for this directly through the IRS online.

Your Tax Responsibilities:
  • File your business’s annual income tax return
  • Pay estimated taxes for you if you own a pass-through entity or for your C Corporation
  • Payroll Tax Activities: withholding, depositing payments, and filing employer tax returns
  • Submit information returns if you have independent contractors, maintain qualified retirement plans, or offer other benefit programs to your staff

You can and sometimes must handle certain tax responsibilities electronically. Many online activities can be facilitated utilizing government provided resources listed below. Not everything listed below may apply to you so remember to consult your accountant if you have any questions.

Depositing Taxes
  • If you have a payroll or make estimated tax payments, schedule your tax deposits in advance by using EFTPS.gov.
  • Transmit W-2s to the Social Security Administration
  • Submit copies of employees’ W-2s with an IRS transmittal form (Form W-3) to the Social Security Administration through the Business Services Online. This suite of services allows organizations, businesses, individuals, employers, attorneys, non-attorneys representing Social Security claimants, and third-parties to exchange information with Social Security securely over the internet. You must register and create your own password to access Business Services Online.
  • Remit Information Returns to the IRS
  • You may have to file annual information returns to inform the IRS about your payments to independent contractors you utilize. Complete this task through the Filing Independent Returns Electronically (FIRE) System
Filing Annual Retirement Plan Returns

If you want or need to file a form in the 5500 series electronically, do this through the Department of Labor’s EFAST2. This is an all-electronic system designed by the Department of Labor, Internal Revenue Service, and Pension Benefit Guaranty Corporation. The purpose is to simplify and expedite the submission, receipt, and processing of the Form 5500 and Form 5500-SF. These forms must be electronically filed each year by employee benefit plans to satisfy annual reporting requirements under the Employee Retirement Income Security Act (ERISA) and the Internal Revenue Code.

If you need assistance with any of the required tasks above, our professionals can help. Click here to contact us today!