Future-Proofing Your Business: Succession Planning with S Corporations
In our final episode on the benefits of S Corporations, we're examining how they facilitate smoother transitions in ownership, crucial for succession planning. This is especially relevant for family-owned businesses looking to pass the torch to the next generation. S Corporations allow for shares to be easily transferred or sold, ensuring the business's longevity and stability without operational disruptions. Keep in mind that for purposes of the 100-shareholder limit, family members are treated as a single shareholder. This can allow more family members to hold shares without exceeding the shareholder limit. And while S corporations have stringent restrictions on ownership, seven types of trusts are permitted to be shareholders, including electing small business trusts (ESBTs) and grantor trusts. These trust structures can facilitate the transfer of ownership while maintaining S corporation status.
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