Business Succession Planning

Sooner or later, everyone wants to retire. But if you own a family business, retirement isn't just a matter of deciding not to go into the office any more. Besides ensuring that you have enough money to retire on, the whole question of what happens to the business becomes paramount. Who's going to manage the business when you no longer work the business? How will ownership be transferred? Will your business even carry on or will you sell it?

Business succession planning seeks to manage these issues, setting up a smooth transition between you and the future owners of your business. With family businesses, succession planning can be especially complicated because of the relationships and emotions involved - and because most people are not that comfortable discussing topics such as aging, death, and their financial affairs.

Perhaps this is why more than 70 percent of family-owned businesses do not survive the transition from founder to second generation. In most cases, the "killer" is taxes or family discord, both issues that a good family business succession plan will cover.

Think of business succession planning as broken into three main issues; management, ownership, and taxes.

It's important to realize that management and ownership are not necessarily one and the same. You may decide, for instance, to transfer management of your business to just one of your children but transfer equal shares of business ownership to all your children, whether they're actively involved in operating the business or not.

The taxes component of succession planning looks at the minimization of taxes upon death. There are asset transfer tax strategies that will help you do this, such as freezing the value of your interest in the company while you transfer ownership to your children.

By reorganizing your corporation to exchange your common shares in the business for preferred shares with a fixed value equal to the common-share value, you can pass all future capital appreciation and income tax liability on that future appreciation to your children while you retain control, and access to the current value of the business,

We at MITAX help our clients to plan their succession in a very tax efficient manner so that they can transfer the potential growth to the next generation but simultaneously keep the control on their share of wealth in the business for the retirement needs

Welcome to Our Company!

Mitax Financial Corporation is a Tax and Accounting firm based in Mississauga, Ontario, Canada.

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Mitax Financial Corporation
2355 Derry Rd. East, Unit 46 (Upper Floor),
Mississauga, Ontario L5S 1V6

Telephone: (905) 461-4949
Cell: (416) 565-8299
FAX: (905) 677-6423
E-mail: info@mitax.ca

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