Determining the value Of your business
What is your business worth? Valuation is often the single most important factor in the transaction and should be central to your planning. Our team can put you in touch with a professional who can provide that service. Valuation will factor in the company’s management structure, supply and demand, inventory, past and future income streams, liabilities and expenses, corporate structure and taxes.
Valuation’s role in wealth strategy
It’s important to consider your tax strategies as they relate to your wealth planning process based on how your business is valued. The first step of creating a tax-mitigation strategy is establishing the fair market value of your business. For publicly traded companies, this is easily done by looking at an up-to-date stock quote. For privately owned companies or limited partnerships, valuation can be more complex but can also allow for even more tax advantages. Because nonpublicly traded entities are not readily marketable, interests in them are often entitled to valuation discounts.
For the owner of a closely held business, this creates an opportunity to make transfers to heirs, trusts and other family members at a lower gift basis. This is just one example of why an outside, independent appraisal is useful in wealth planning.
