Succession Plans Are Imperative For Solo Business Owners

Owning a business can be a challenging yet rewarding experience. After all, you’re having a meaningful impact on your world and the world around you by running your company. Part of running a business is preparing for the future – including a future without you.

The best business is one that looks deep into the future and is proactive about future needs. A succession plan can protect your business from getting lost in transition when you’re gone. This is especially true for solo business owners because when you’re gone there are no business partners to assume your duties.

When you fail to have a proper succession plan in place, you run the risk of significant delays in the transition to your successor. Even if you place your business in a trust, your plan may not be as rock solid as you hoped for.

Consider a scenario where you’ve placed your business into a trust but the banks don’t immediately recognize the trustee you designated. In this case, your heir of choice will not have access to company bank accounts to take care of payroll and business expenses. This could play out one of two ways: your trustee is forced to cover payroll and other business expenses out of pocket until access to company accounts is granted or your trustee does not have the funds to do so and is forced to shutter the business.

In either of these scenarios, your life’s work is at risk. All the time and effort you put into forming, growing, and sustaining your business could go out the window purely because of paperwork and legal hoops your trustee is left to jump through.

Thankfully, you’ve got options to protect yourself from this scenario. One way would be to include language in the Operating Agreement for your LLC that defines who assumes control of the business and business decisions when you pass away, become incapacitated, or are otherwise unable to make business decisions yourself. You can also do this by appointing a power of attorney which accomplishes the same goal of ensuring the business continues while you’re incapacitated or while the business transitions into new ownership through your estate plan. We’ll dive more into Operating Agreements and power of attorney designations in upcoming blogs.

If you need help getting your business succession plan in place or recently assumed control of a business but are having trouble getting access to company accounts then contact Bryant Taylor Law right away. Our experienced team can get you on the right track and protect the hard work of you and your predecessors.

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