Owning your own business can be a rewarding experience. Ideally, with hard work, patience, and perseverance, you will build an enterprise that will benefit you and your loved ones for generations. In time, you may find that you want to pass what you have built on to a family member. Before taking action, there are some things you should know about transferring business ownership interest to family.
Assessing Your Business Transfer
If you are thinking about transferring business ownership to family, you may also have other considerations. For example, are you transferring your interests because you are ready to retire? Do you want to maintain some connection to the enterprise? Will you be serving in a consulting role? Will your successor be someone who already works for you? Getting these and other preliminary questions answered can help you clarify your goals and timeline for your transfer.
Evaluating Your Business
If you have been operating your business for a while, you have probably established a routine and have a general sense of your assets and debts. However, before transferring your business interest to a relative, you will want to evaluate your business thoroughly.
This type of review typically involves reviewing all aspects of an enterprise, including matters such as:
- your assets and debts,
- pending transactions,
- pending and potential litigation,
- future anticipated expenses, and
- your current and expected staffing.
Once you have a complete sense of the state of your business, you can move into the next phase of transferring your business interest to family.
The Details of the Transfer
Once you have completed your assessment, you will need to consider the transfer details. For example, do you expect to give your interest to your family member? Are you selling to them? Will they be co-owners with other relatives or colleagues?
Depending on how you transfer your business interest, there may be certain tax consequences and logistical issues. Therefore, before moving forward, it would be best to discuss your plans with an experienced Florida business attorney. Your business lawyer can review the potential transfer methods and help you determine which works best for you and your family member.
Formal Business Assessment
In some ways, the stakes can be higher when transferring your business interest to family. If something goes wrong, or the receiving family member feels they did not have critical information before the transfer, it could lead to conflict and damage your relationship. Therefore, as with any business transfer, you will want to have your enterprise professionally assessed before transferring your interest. Although you may be selling or giving your interests to family, you will want to take the same steps to protect your interests during the transaction. Using professional services can help safeguard you and prevent future disputes.
Making the Transfer
When it comes to actually transferring your business interest to a family member, you will want to consider the available methods. There are multiple ways you can complete a transfer of this nature.
- Gift—you may want to give a loved one your business interest outright.
- With Conditions— You may want to transfer your interest with the condition that you be paid an income or act in a consulting role.
- Sale—It may also be a better choice for you to sell your business interests to your family. If that is the case, depending on the parties, you may be selling outright, financing the sale, or engaging in a leaseback transaction.
These or other business interest transfer options may be suitable for your situation. However, it’s important to enter into this type of transaction with a comprehensive view of the parties and potential issues. Therefore, before transferring your interests, you should consult with a Florida business attorney. Your counsel can help you evaluate your business transfer options and determine what works best for you, your family, and your circumstances.
Contact an Experienced Business Attorney
Attorney Richard Sierra at the Florida Small Business Center assists clients like you with business and litigation matters. As always, Our Goal Is to Help You Succeed™. For an appointment, you may call us at 1-866-842-5202 or use the contact form on our website. We represent small business clients throughout the State of Florida, including Coral Springs, Coconut Creek, Boca Raton, Delray Beach, Pompano Beach, Sunrise, Fort Lauderdale, Miami, West Palm Beach, Jupiter, Deerfield Beach, Stuart, Port St. Lucie, Orlando, Naples, Fort Myers, Sarasota, Tampa, and surrounding communities.