Do you own a business? If so, is it a sole proprietorship, a partnership, a limited liability company, or a corporation? If you don’t know, then it’s probably a sole proprietorship, unless it has more than one owner, in which case it’s probably a (informal) partnership.
Now for some slightly more complicated questions. Do others have an ownership stake in the business? If so, where is it written down who owns what share of the business?
Once you know the answers to those questions, you can start on succession planning.
What is succession planning? It’s planning for the future of your business.
Do you know what a buy-sell agreement is? Do you know what key man insurance is? They often go together, although you can have one without the other. You don’t need to know what a buy-sell agreement is or what key man insurance is to start on succession planning, although it helps.
To put a succession plan in place, there are some still more complicated questions that need to be answered. Questions like: what if you were no longer able to participate in running the business? What if one of the other owners is no longer able to participate?
What if you and your co-owners just decide that you want to do something else? Could the business continue to operate without you?
If your business could continue to operate without you, could you continue to own it? If so, how would you maintain control?
If your business could continue to operate without you but you decided to sell it, what, exactly, do you have to sell, and how do you sell it?
If your business could not continue to operate without you, and there is no one to take it over and keep it operating, how would you wind it up?
A lawyer with good working knowledge of business formation law, estate planning law, and tax law can go through all the possibilities with you and help you decide on a plan, then do what it takes to put the plan in place.
It’s an interesting, creative process. It’s like solving a multi-layered puzzle that may have more than one solution. The process isn’t mysterious. In fact, you need to understand the process to make good decisions. Your lawyer should be able to explain it in terms that you can understand.
When you’re ready, I can help. But don’t put it off.
Nathan B. Hannah is a Shareholder in the Tucson office, and practices in the areas of estate planning and administration, real estate, and commercial transactions. He is also a noted blogger, and you can find more of his articles on his private blog,
Contact Attorney Hannah: firstname.lastname@example.org or 520/ 322-5000