Retirement Planning for Small Business Owners
Whether you employ staff or not, if you are self-employed, two of the most important issues you’ll need to plan for when it comes to planning for your retirement is making adequate financial provisions and you’ll also need to think about your ‘exit strategy’.
Consider Your Exit Strategy
What do you plan on doing with the business when you retire?
If you also have employees, it’s important that firm plans are in place in order to avoid any disruption or upheaval once you have left the business. By going into business in the first place, you’ll, no doubt, have had a clear vision of what you intend to get out of it and ultimately, you’ll be wanting to shape the business and steer it on a course by which you can leave it when you retire when, hopefully, it is still doing well and the market is buoyant. It may well be that you intend handing over the reins to a family member or you might wish to groom other potential successors who will be ready to take over when you decide to retire and so this needs careful planning.
How An Exit Strategy Can Impact Upon A Business
Leaving a business which you have built up can be subject to a number of consequences as a result of you leaving. The timing and the way you retire can affect the value both yourself and any other shareholders might receive from the business. If you’re selling the business on, you’ll need to decide how you want to receive payment for it. Sometimes, for example, you will simply receive a one-off cash lump sum for the sale. However, you may prefer staged payments or, perhaps, defer payments for a while if you don’t wish to take advantage of the sale immediately. You might also be considering maintaining some kind of involvement in the business in a greatly reduced capacity and the way you exit can sometimes affect your tax liabilities.
Whatever you decide to do, GLF Richards & Co can advise how best to exit the business in the most tax efficient way when you retire, as doing it correctly and appropriately will ensure both yours and the business’ future success.