Transferring your family business
Are you planning to pass your family business to the next generation? Check out our tips to ensure a smooth transition.
Did you know family run businesses account for 70% of all businesses in Australia! However, many people don’t know how to successfully hand over their business to the next generation.
How to choose a successor
When choosing a family member as a successor, think about who will be best for the business. It’s an attractive option to set up your children financially but it’s also important to be sure that they have the necessary set of skills and the commitment to take over your business. Also remember to be aware of conflict if others are equally interested in taking over, especially if some non-family members are more qualified for the job.
One strategy to help choose an appropriate successor is to have a panel of non-family members conduct interviews and offer advice on candidates. This will remove bias and show a considered approach towards the future of your business.
Developing a succession plan
A succession or exit plan outlines who will take on your business once you leave. Every business should have a succession plan in place in case of unforeseen circumstances.
Things to consider when developing your plan include:
- will you transfer both ownership and management of the business?
- does your successor need training and mentoring before transition?
- will any family members be actively involved in the business? What will their roles and responsibilities be?
- how often will you review your plan?
Helpful resources to help you:
- Read about succession planning and help your business transition smoothly.
- Download our handy succession plan template and guide to help you set up a plan for your business.
Transferring the legal requirements
If you’re transferring your business to a family member you will no longer be part of it and will need to do the following:
- transfer your business name or cancel your business name (if it will no longer be used)
- cancel tax registrations such as Goods and Services Tax (GST)
- lodge any final tax returns
- pay any outstanding activity statements, instalment notices and bills
- make GST adjustments on your final activity statements
- transfer any other assets, such as domain names or web registration
- transfer any business records, customer records and employee records
- cancel your Australian Business Number (ABN) after you have met any lodgement, reporting and payment obligations.
For more information to help transfer your business, read our handy tips on changing ownership.
- Check out the Australian Small Business and Family Enterprise Ombudsman (ASBFEO) website for more information on running a family enterprise.