Due to the sudden increase of economic growth and development in Canada, there is an increase of investors and businesses in the country. The wave of the economic growth has sprung various individuals to start small scale businesses while corporations increased their holdings dramatically in order to keep up with the times. Everything from financial services to health and leisure has been improved. However, due to the sudden increase of businesses, there is also a high rise of companies who are going bankrupt.
A recent study confirmed that over half of business owners in the country do not include succession planning in business. They do not have prior plans for growth and development. They also have problems when it comes to tax-reduction strategies and employment issues. That is why it is essential for any company to learn the proper planning techniques in order to decrease the chances of bankruptcy.
In truth, is about total control over one’s assets. It is about controlling eventual exits in business and about learning the essential maneuvers so that companies will have proper retirement income. By checking the investment of companies, analyzing stability and satisfying stockholders companies will be able to create a well organized plan for expansion and share protection. Firstly, there is a need for life and disability insurance for all members of the company.
Many successful entrepreneurs will often add several plans not only for their own children but also for their employee’s children. If personality conflicts and other problems may arise in the company, some plans are placed in order to protect the second generation. That is why advance planning as well as team organization is the key in finding future problems. A family business facilitator can also help when it comes to resolving possible disputes while at the same time checking on the important issues of the company.
The key to proper succession planning in business is also through proper training. Yes, training a successor will not only minimize possible problems in the future but will also enable the successor to learn more about the company. Once they learn more in the business, they will be able to make the right choices in the future. In order to know the proper successor, checking the past records of several employees will be the first step. It is important to check for individuals who have the proper skills and has the determination to lead the company. If such a member is found then transferring the ownership will be the next step.
Transferring ownership requires several legal and taxation considerations. Most companies will require limiting their taxes before passing their titles to successors since the successors will be liable to any debts that the whole corporation has. In order to decrease the debt, most companies have an estate freeze protocol wherein all the actions of a certain corporation are frozen until the next generation is under control. Such a protocol actually reduces the amount of tax to be paid to the government.
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