Succession Readiness Report: Tax and Estate Planning
Succession Readiness Report: Tax and Estate Planning
When it comes to selling or transitioning your business, proper tax planning and financial structuring are paramount. Efficient planning can make a big difference in the value you retain.
Don’t leave money on the table. Read on to find out how to ensure your business value meets your financial goals.
Are you sure the net value of your business aligns with your financial goals?
When preparing to sell your business or transition it to new leadership, understanding the tax implications, ensuring solid financial planning, and structuring your estate in a tax-efficient manner are all essential. Ultimately, the right planning can make a difference in the value you retain.
Consider this: someone can sell their business for $5 million with an efficient tax structure and walk away with $3.5 million after tax. Someone else could sell their business for $8 million but walk away with $4 million because they weren’t structured efficiently.
You don’t want to be the person who leaves money on the table. However, only a mere 13.3 percent of business owners sought help and developed a comprehensive tax and estate plan.
This planning involves understanding the exemptions and structures — like the lifetime capital gains exemption (LCGE) and the ‘24-month rule’ — which can reduce tax liabilities if planned for well in advance of the sale. But it also requires a deeper look at your financial landscape, including cash flow needs, retirement goals, and the legacy you want to leave.
It takes time, thought, and a deep understanding of your transition objectives.
Digging into the data
“No business owner wants to face unexpected hurdles during their exit transition. At MNP, we work with you to create a proactive, tax-efficient plan that aligns with your financial goals and ensures no opportunities are left behind.”
– Am Lidder, Senior Vice President, Tax Services
Ask yourself:
- Do I qualify for the lifetime capital gains exemption?
- Do I have a plan in place for a tax-efficient exit from my business?
- How much money do I have set aside for retirement?
- When do I want to retire?
- How would I define my values, goals, and objectives?
- Have I considered relevant challenging family, interpersonal, or financial issues?
We suggest:
- Determine your financial needs and define your goals
- Consult with tax advisors and estate planning professionals
- Revisit your estate plan regularly, which includes your overall tax plan
