By Ryan C. Raffensperger, CPA

In today’s business climate, small-business owners are often consumed with the daily operations of their business. Daily events leave them with little time for other tasks. The business owner pushes long-term planning to the bottom of the to-do list or ignores it all together. One of the key roles that a CPA has with a small-business client is to make sure that a plan for retirement and succession is in place long before it’s needed.

For most of the small-business clients I’ve worked with, seeing their businesses continue after retirement is of vital importance. The sale of the business is often an integral part of their retirement funding scheme, but there is also an emotional component. Watching a business that they have built from the ground up close its doors is tough for many who have invested their time and effort through the years.

As a trusted adviser, the CPA should begin helping a client develop an exit plan, even when the client isn’t thinking about retirement. Taking advantage of tax savings via deferred retirement plans is only one item to be addressed. Buy-sell agreements and insurance policies to cover unexpected events are equally important.

If there is a key employee involved in the business who is a potential successor, that individual needs to be approached about the long-term goals of the organization. Often those potential successors are family members in a small business. The transition between family members is sometimes one of the most difficult, especially when multiple members are involved. Therefore, a discussion and a plan designed for that retirement should be held long before the transition occurs. The earlier that conversation happens, the better it is for all.

Obviously, one of the key elements of a smooth transition to retirement is the sale of the business and the proper valuation of the business. Most business owners think their business is worth more than it is. Being honest with your clients about the value of the enterprise throughout its operation will give them a real sense of what they can expect in return at the end.

One area that may be ignored but has become essential is health care, particularly long-term care plans and insurance coverage. Does the retiree have the assets to sustain him or her throughout retirement? Long-term care has already reached six figures on an annual basis, and it continues to escalate.

As a trusted adviser, it is our job to advise them about all of these issues and more as they set a course for retirement. In most cases that responsibility has already started. If it hasn’t, now is a great time to have a conversation with your clients about retirement and their small business.

Ryan C. Raffensperger, CPA, is a partner with Raffensperger, Martin & Finkenbiner LLC in Gettysburg, Pa.