Pass it on: Why hiring an accountant Is key to efficient succession planning

The UK has a strong history of being a nation where independent businesses thrive. Small businesses come in all shapes and sizes, from hairdressers to restaurants. According to the Institute for Family Business, over two-thirds of all small businesses are family owned. This equates to 4.8 million businesses, employing over 12.2 million people.

The future of the business can be the cause of many sleepless nights for business owners. Knowing what is right for the future success of the business is difficult but add into the mix family relationships and the situation can become even more complex.

A good succession plan can help the owner plan for retirement and put in place solid plans that can secure the future of the business that may have been in the family for generations. Bringing in external help, in the form of an accountant or business advisor can help keep emotions at bay whilst offering unbiased advice. More specifically they can offer advice on:

The best time to plan

At some point in your life, you have to start thinking about stepping down and passing the reigns of the business onto some else. This could be due to health reasons, or you feel you’ve given it everything you can and it’s time someone else took over. Whatever the reason, the more time you give yourself to prepare a plan, the better.

Lots of decisions need to be made when putting a succession plan together, and the process can take over a year to finalise. We advise our clients to start thinking about preparing a plan, two or three years before they actually plan to step down from the business.

At Wright Vigar we are specialists in helping family-owned businesses plan for the future. Give us a call on 0845 880 5678 to speak to a member of our Succession Planning team.

How to approach difficult conversations

The biggest decision you will have to make is, who will take over the business after you. If you plan to keep it in the family, will you pass it onto all of your children, or one? It could be that you don’t have children, or your kids may have their own plans and running the family business isn’t included in them. What will you do then? Sell it? Or, consider a management buy-out?

These are things that have to be discussed and an accountant or business advisor can offer advice on how to approach these conversations with a cool head.

Stepping back – letting go of responsibilities

It can be emotionally difficult to step away from a business that you’ve put so much of yourself into. It’s easier when you know that the business will be run by someone or a team who are as passionate about it as you are. An accountant or business advisor can offer guidance on which managers or directors have the competency to take on the tasks that you once did. If this resource does not exist within the business your accountant may be able to help to bring in an interim manager.

Financial aspects

A central aspect of succession planning is deciding how you can pass the business on in the most tax-efficient way. An accountant who has experience across estate planning, tax planning and corporate finance, will be invaluable. You’ll receive expert advice on complex areas from a single source, which can minimise delays to the succession planning process.

They’ll be able to guide you on how you can fund your retirement without draining the business financially. If you plan on financially compensating family members not involved in the business, they can guide you on the most tax-efficient way to do this.

Our team of experienced Tax Advisors is on-hand to assist with your Inheritance Tax Planning so that any tax liabilities are minimised. Get in touch with us on 0845 880 5678 to arrange an initial free consultation.

Preparing you for retirement

As well as having plans in place for the business, you also have to consider your own future. Most importantly, you need to make sure you have enough funds to support you through your retirement and have policies in place that make sure your loved ones are also taken care of. At Wright Vigar we are able to refer you to independent financial advisors who can discuss pensions, annuities, savings, investments and much more.

Succession Plan

Having a robust succession plan will provide a lot of comfort to your family and your employees, who may be worried about what will happen to them once you step away. Also, emotions have the ability to cloud people’s decisions, so inviting in an external source to facilitate the process, can prevent family relationships breaking down and it will ensure the process is completed in a seamless and timely manner.

To see how our succession planning team can help prepare you to pass on your family-owned business to the next generation, give us a call on 0845 880 5678, or email us on website@wrightvigar.co.uk.