There comes a time in every business owner’s tenure when he or she considers transferring ownership. Maybe you want to retire, or maybe it’s time to let the kids take over. Whatever the reason or situation, there is a way to pass the torch smoothly and without hitch.
Depending on how you want to proceed, there are a variety of ways to transfer ownership of your company to someone else. Some of these options are as follows:
- Outright Sale – This is typically the fastest and easiest way to transfer ownership of your business to a family member or any other buyer. If the sale price is equal to or more than the fair market value, then it is not subject to gift taxes.
- Buy-Sell Agreement – This is an agreement struck between you and a buyer that stipulates that the business remains yours until a specified situation triggers the sale. The trigger can be anything that you and the buyer agree on, such as your retirement or death. When the agreed upon situation comes about and triggers the sale, the buyer pays fair market value. A buy-sell agreement restricts the owner from selling to anyone other than the specified buyer.
- Private Annuity – This allows you to completely transfer ownership of your business to another person in exchange for monthly payments until you die. You can also get a joint and survivor annuity that means that you and another person will receive payments until you are both dead. This option is also technically a sale and therefore exempt from gift taxes.
These are just a few of the more popular options that may be available. It’s important to consult a business attorney in these situations to ensure that everything goes to plan. An attorney can help you explore ways to avoid ridiculously high transfer taxes and determine the best methods of transferring ownership of your business to suit everybody involved.
Garland & Mason, L.L.C. – New Jersey business lawyers