Should my farming child join my company or start their own?

Patti Durand Business Advisor, FCC Humboldt, Sask.

A business transition will have to occur in some form and there is no right answer as to how a family should make decisions. Many default to choices made a generation prior without considering other options. It’s good to challenge your decisions and why you made them.

There’s a temptation to make this decision independently, by instinct, but the choice of business structure will greatly impact all involved parties for years to come. Pros and cons come with each option and no choice will be perfect, so aim to pick the best option for your situation.

First, take an honest look at the working relationship between the current farm leader and the incoming generation.

• Do they get along? Are they able to resolve disputes? Is there a high level of respect and trust that both are committed to maintain?
  • Now consider: are we better to be shareholders in the same business, or have independent businesses, with co-operative, mutual benefits?
• How long do the current shareholders want to be active in the business?
• How will decisions be made? Who will have voting power and for how long?
• Are long-term goals and vision for the farm business consistent or different between parties?

Next, consult your accountant, understanding that their knowledge of farm business structures and tax is an area of specialty. Ask:

• Can you advise us as we make farm structure choices with transition and tax efficiency in mind, or would you recommend another accountant with this expertise?

With those questions satisfied, you can share: “Here are some factors we care to address. Can you advise us on our options, and the pros and cons for each?”... Read More