Why Keeping it in the Family is Sound Business
There are more than three million family businesses in Britain including household names such as Dyson, Clarks and Stagecoach according to the Institute for Family Business.
A recent poll undertaken by PwC showed that 63 per cent of those polled think that family businesses are more entrepreneurial as a result of working in a close knit group. Strong family businesses also recruit from outside the family and often treat these staff very much as part of the family, as indeed we do in our family accountancy practice.
There are of course downsides to the family model, stress and conflict can sometimes surface and cause problems when things don’t go according to plan. Difficulty in separating family and business life can also arise and business owners also often take problems from home to work and vice versa.
Overall however research shows that family businesses usually prosper very well and almost half of British small business owners say that they plan to pass on their business to their children when they retire.
In a survey by Close Brothers, one in ten of the business owners asked said they had not thought about plans for succession though it requires thorough preparation and often professional advice. Those considering retirement need to consider share ownership and whether they wish to retain an element of control.
Professor Dr Thomas Zellweger, chair of Family Business at the University of St Gallen, Switzerland, says that ‘the most challenging part of the succession process is how to deal with the emotional aspects. Much to the disdain of some parents it is often the case that students with a family business background did not wish to enter the family business”. A survey undertaken by Professor Zellweger found that only 23 per cent of students were interested in stepping into their parent’s shoes.
From a tax perspective, family businesses make sense as normally moving assets into a trust for example would attract an inheritance tax charge of 20 per cent but shares in most family businesses will qualify for tax relief. If you decide to sell your business you should be entitled to Entrepreneurs Relief, a flat rate of capital gains tax that applies to individual lifetime gains of £10 million. To qualify you need to have owned at least 5 per cent of a business and worked in it for at least a year.
For advice on how to organise your family business affairs contact us on 0131 556 8595.
His appearance on a Channel 4 television programme about the inside workings of Revenue and Customs was watched by 4.1m which sealed his status as one of the most highly respected tax consultants to ever work in Scotland.
Ricky led all tax investigation and COP 9 cases, using his extensive knowledge to help people reach a positive resolution to their situation.
Ricky passed away suddenly and unexpectedly in June 2022 after leaving his indelible mark on the company he founded and headed for over 35 years.
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Ricky worked as an Investigator in the Inland Revenue for over 20 years before founding Steedman & Company in 1987, giving him the experience and knowledge that enabled him to help so many clients over the years.
His appearance on a Channel 4 television programme about the inside workings of Revenue and Customs was watched by 4.1m which sealed his status as one of the most highly respected tax consultants to ever work in Scotland.
Ricky led all tax investigation and COP 9 cases, using his extensive knowledge to help people reach a positive resolution to their situation.
Ricky passed away suddenly and unexpectedly in June 2022 after leaving his indelible mark on the company he founded and headed for over 35 years.
