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Business Exit Planning

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2 minutes reading time (458 words)

Accounting For A Successful Exit

Marko Mijuskovic, BA, MBA, MSIS, and CExP, is in the business of making his clients' numbers look better. Whether dealing with retirement planning or a business exit, Marko takes a holistic view of a clients financial picture This includes working through accounting, legal, managerial, and tax concerns - just to name a few - to create a comprehensive retirement strategy. Accounting for all the aspects minimizes the potential for any unpleasant surprises to tarnish the golden years, or compromise a promising deal.

"As we approach April, I like to remind people that one of the most important but overlooked topics is taxation," said Mr. Mijuskovic. "It's very common for people to forget taxes. In the case of businesses succession, a parent or parents who own a company can very often, and very wrongly assume, that by handing things over to their children they can avoid any tax liabilities."

Not only is taxation a reality, but an improperly structured business exit can also create multiple taxable events, leaving the seller and buyer to take as much as a combined 50% to 70% tax hit. That leaves the seller with far less than they were anticipating post-transaction, and it can also force the company to generate approximately 50% to 70% in additional income to make up the deficit. For most Hawaii businesses this can be a difficult, if not impossible goal. 

"After the blood, sweat, and tears of a lifetime spent building a business, nobody wants to see all of their hard work wind up in the hands of the tax collector. with a little planning, this situation is completely avoidable," reassures Mr. Mijuskovic. "Taxes are a reality, but if a company sale is properly structured, tax exposure can be kept to the legal minimum."

One of the strategies Mr. Mijuskovic recommends that his clients consider is whether a local business should be headquartered elsewhere. According to Charles Au, one of the CPA's with whom Marko works very closely, "Review where and how you conduct your business and consider reorganizing in jurisdictions with a more favorable tax environment."

"With so many locally owned and managed businesses, I see a real need in the community to educate people about retirement and business exit planning," said Marko. "So to help local business owners learn how to plan for an exit, I will be holding free monthly Business Exit Planning Seminars for individuals as well as business owners and their advisors." Those in attendance will learn the steps necessary to create a retirement or business exit plan, including determining an exit timeline, guidance o how to appraise the value of an individual business' assets, and in the case of a company, securing continuity plan options for internal and eternal t4ransfrs of ownership.

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Planning A Business Exit