Many of the Latino business owners start their businesses to build a legacy for their families. In fact, according to a Business Owner Outlook Study conducted by MassMutual in 2018, 34% of Latino business owners They indicated that they plan to pass their businesses on to their families.

By MiamiDiario Newsroom

The study revealed that 69% of Latino business owners have a written succession plan, and 59% have a purchase-sale agreement in the event of death and 52% in the event of disability.

The death or disability of one of the owners is one of the biggest threats to the business. Not only because it can affect the day-to-day operations of the company, but it can bring about all sorts of estate and property tax issues. It is important to think beyond today and plan for the unexpected as circumstances that cannot be planned for and can threaten the viability of the business.

Consider these three recommendations to ensure a smooth transition for your business:

Know the value of your business

This is an important step in building a good business succession plan to keep your company viable and protect your loved ones. A business valuation conducted by a licensed expert estimates the economic value of your interest in your business. It is often used to determine the sale value of your business, the amount needed to finance a buy-sell agreement, or assign the value of individual business assets.

Determine who will take over the business

Have an important discussion with any family members or trusted employees that you intend to appoint as successor to your company and frequently communicate what they should expect. Make sure your business successor understands your new role.

Make sure you have an established purchase-sale contract

A purchase-sale contract can be designed to protect your business from the following- death, disability, divorce, departure, and disqualification. For example, without a contract of sale when there is a death or disability of a business owner, the business or portions thereof, may need to be sold in order to pay surviving owners for their share of the business, property taxes, or other business operating expenses. If you have a purchase-sale contract, it is important to make sure that it is properly established with the current value of the company; otherwise you will not be able to achieve what you want. To ensure that your sales contract continues to meet the needs of your business, you should review it at least every three years.

"Establish a succession plan for your business can be very complex due to relationships that you have with family members who are involved in the business or your long-time employees,” said Alejandro Mendieta, Managing Partner of Coastal Wealth.

“An important element to keep in mind is that management and ownership are not always the same. For example, you may decide to transfer the management of your business to one of your children or hire a general manager, but you may keep ownership or transfer ownership to your children. Regardless of what you are considering for a succession plan for your family business, our team is here to help,” said Mendieta.

With information from press release

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