Skip to content

Top 10 Things to Think About in Transferring the Family Business

You’ve all heard the saying “failing to plan is planning to fail.” As a business owner, one of the most important and beneficial actions you can take is establishing a plan for the continuation of your business when you retire or in the event of an emergency such as an unexpected death or disability.

Planning ahead for business succession allows the advantages of peace of mind, adequate training time for successors, financial security, and can significantly reduce family drama and conflict.

For most, this can be a very overwhelming topic and it is easy to put off because you don’t even know where to begin.

To get you started, here are 10 key items to consider in transferring the family business:

  1. Plan ahead – Taking the time now to plan for your company’s future will help the transfer go smoothly for all involved. Start at least five years prior to your goal of departure.
  2. Determine the real value of your company through an accurate valuation which will help you arrive at a realistic number.
  3. Determine the income you’ll need to support your lifestyle and goals. Will you continue to work in the business at all?  What portion of the proceeds from the sale will be yours?  What expenses will you now have to incur if you are no longer an owner?  These are all things that need to be taken into account.
  4. How can you structure the transfer to be the most advantageous for you? Will you be gifting the business?  What about offering financing assistance to a family member who will be taking over or an outside buyer?  Have you thought about retaining a portion of business assets to obtain an income from rent or other assets?
  5. What type of impact will this have on the family members who are taking ownership?
  6. Work on cleaning up the balance sheet and improve efficiencies.
  7. Make sure you have solid financial controls and processes in place. Accurate and reliable financial statements are far more attractive to future buyers – even if it is in the family.
  8. Get a handle on your working capital aka “cash” in the business.
  9. Depending on the choice of method that the business owner uses to pass along the family business to family members, tax implications need to be taken into consideration. An estate tax is imposed when a transfer of property is caused by the owner’s death.  A gift tax occurs when an owner of property transfers his property to another while he was still living, as a gift, meaning without receiving payment for the property.   Note – gift taxes vary from state to state.  And with the passing of the Tax Cuts and Jobs Act on December 22nd, 2017, business owners who are thinking about transferring ownership to family members have the ability to transfer twice as much business value free of transfer tax than allowed in 2017 which can be very attractive for those involved.
  10. Line up your team of accounting, tax, legal, and financial advisors to make this transition go smoothly and provide you savings and endless value in the long run.



Mike Steinl

About the Author

Michael Steinl is a Partner in the firm’s Tax & Business Services Department and leads Wegner CPAs’ Manufacturing/Supply Chain practice. With more than 25 years of experience in public accounting, Mike has worked with a broad cross-section of clients.  He has a passion for helping with clients in the manufacturing/supply chain industry, assisting with a variety of costing and inventory issues.  Additionally, Mike specializes in employee benefit plans as well as tax, accounting, and consulting assistance for family and closely-held businesses, cooperatives, construction, high tech companies, and financial institutions.



Want more like this?

Subscribe to our email list to get our latest business blog posts delivered to your inbox!

Oops! We could not locate your form.



Would you like to learn more?

Join our email list to receive our most recent blog posts, notification of upcoming seminars, and access to new resources!

Stay Connected
More Updates