As an experienced Ohio business succession lawyer, I know there is no substitute for advance planning in preparing for the future of your business. Business succession planning ensures the continued success and stability of your enterprise when you are no longer at the helm. Ohio statutes provide a framework for this process, and navigating these laws with precision is paramount to ensure a seamless transition.
Key Issues In Ohio Business Succession Planning
Business succession planning in Ohio comes with its array of legal issues that must be addressed if the outgoing leadership, along with the incoming one, has to face minimal obstacles in their way to transition. Planning becomes required in business succession when it deals with looking at the organizational structure, financial health, and strategic future of the organization.
Legal Form And Agreement
The Ohio Revised Code guides the different business forms, such as partnerships, corporations, and LLCs. In each of these business forms, there may be potential succession implications. As such, ORC 1705.18 is about the rights and duties of the LLC members, which are very critical in transferring membership interests.
Buy-Sell Agreements
These are extremely important for explaining what needs to take place if or when an owner wishes or needs to sell his or her interest in the business, retires, becomes unable to work due to some kind of disability, or dies. It is advisable to create buy-sell agreements under Ohio law, specifically sections such as ORC 1701.591 that handle shareholder agreements to ensure the smooth running of the business is not disrupted while the ownership interest in it changes hands.
Tax Considerations
It is just as crucial to understand the Ohio tax implications, including estate and gift taxes in planning. Moreover, successful succession planning often relies on accomplishing minimal tax burdens, with Ohio tax codes offering specific avenues for tax-efficient transfers of business ownership.
Estate Plan Integration
Your succession plan for the business must be integrated with your estate plan. By this, it is easy to ensure that any transfer of interest in your business will align with other related estate planning goals and objectives. Examples of these are providing for your heirs or supporting charitable causes.
Frequently Asked Questions About Business Succession Planning In Ohio
What Is A Buy-Sell Agreement, And Why Is It Important In Ohio?
A buy-sell agreement is a legally binding agreement between business owners over what transpires if an owner dies, is forced to leave the business, or elects to leave. The importance of this agreement is that it allows the prevention of possible conflicts between remaining owners and any departing owners or their heirs. It ensures that the business is running smoothly and that the ownership transition is managed in an orderly manner.
How Often Should I Review My Business Succession Plan?
It is suggested that you revisit your business succession plan every three to five years, or when any major personal or business changes occur. Any change in your financial situation, business structure, or state laws can require that you review and more than likely revise your succession plan.
Can A Business Succession Plan Reduce My Ohio Tax Liabilities?
Yes, if properly planned and with sufficient legal advice a business succession plan will lessen potential tax liabilities. Planning strategies could include the gifting over time of shares to the heirs, or even the establishment of trusts, which may assist in lessening estate and gift taxes. It’s best to consult an experienced attorney who will make sure that these are executed according to Ohio tax laws.
Contact Our Cortland Business Succession Attorney For Your Free Consultation
Applying a business succession plan requires careful planning with your attorney and financial planner if it is to be done in Ohio. This will ensure that everything is bound by the state’s laws in which the successor resides or the business is located. Your business succession plan should be reviewed and updated on a regular basis while your business continues to grow and market conditions change.
If you are going to plan for business succession, then you must do it right, or else you will risk losing a portion of your entire business. Contact our Cortland business succession attorney, John Grundy, at 330-637-9030 to schedule your free consultation. We provide practice-leading personalized and strategic counsel to business owners in the complex landscape of succession planning, tailored to your business’s unique needs. Call today, and don’t let there be a tomorrow which is too late to plan your business’s future.