You’ve done it – you've successfully sold your business! The years of hard work, dedication, and perhaps even a few sleepless nights have paid off. The contracts are signed, and the celebration has subsided. But now, you may be asking yourself, "I sold my business; now what?" Well, the journey is far from over. In this new chapter of your life related to selling your business, there are several significant financial loose ends to tie up to ensure your future financial security and peace of mind.
Coutts Bank's research reveals that 26% of business owners who sell their businesses still determine their post-sale plans, with 40% later regretting not having a more solid plan. As you navigate the aftermath of selling your company, explore the following opportunities for your next adventure.
Outline Your Approach to Sales Proceeds
After selling your business, the first step is incorporating the proceeds into your financial plan. Working with a wealth manager who can help you make informed decisions about managing your sale proceeds and retirement assets is crucial. Building a diversified portfolio of low-cost, tax-efficient assets that align with your long-term financial objectives is essential.
Establish an Income Source
Transitioning from a regular salary and business profits to relying on your investments and assets for income can be a significant shift. Your wealth manager can assist you in setting up a tax-efficient monthly income stream that covers your living expenses and ensures financial stability.
Understand the Possible Tax Implications
Selling a business comes with unique tax considerations. The IRS typically requires you to account for every individual asset sold with the business. Categorizing these assets correctly – whether they are capital assets, inventory, real property, or depreciable property – is essential to minimize your tax liabilities. Seeking guidance from a tax professional is advisable to navigate this complex process.
Prepare for Health Coverage
If you sell your business before age 65, you won't be eligible for Medicare benefits. This means you need to plan for healthcare coverage. Your wealth manager can assist you in evaluating insurance options and project how healthcare costs may affect your retirement cash flow.
Review Your Estate Planning
Selling your business should prompt a review of your estate plan. Work with your estate planning attorney and wealth manager to update designations like guardian designations for minor children, trusts, designated trustees, healthcare proxies, powers of attorney, and your will to ensure they align with your current circumstances and wishes.
Formulate a Charitable Giving Plan
After selling your business, you should give back to causes that matter. Establishing an effective charitable-giving strategy is crucial. Options like direct gifts of cash or appreciated securities, donor-advised funds (DAFs), family foundations, and charitable trusts can help you maximize your impact while minimizing your tax obligations.
Enjoy Your Retirement
Finally, it's time to savor the fruits of your labor. You've secured your finances for your employees, customers, and family, and now it's time to embrace the retirement you've always dreamed of. Take this opportunity to focus on personal fulfillment, engage in your hobbies, spend quality time with your loved ones, and set achievable goals for this exciting phase of your life.
Selling your business is a significant achievement, and the next chapter is full of possibilities.
Consult with professionals to make well-informed decisions about your financial future. Your hard work has paid off – now, it's time to enjoy the rewards and make the most of your newfound freedom. Congratulations on a successful sale, and here's to an exciting and prosperous future!
Sold my Business FAQs
Can a business broker help me after I sold my business?
Yes, business brokers can provide post-sale assistance by offering guidance on managing your sale proceeds, connecting you with wealth managers, and helping you understand and navigate potential tax consequences.
They may assist with healthcare planning options and introduce you to insurance experts to ensure you have appropriate coverage.
While their primary focus is on the transaction, some business brokers can recommend estate planning professionals to help you review and update your estate plan if needed.
How can a business broker assist with tax-related matters after I sold my business?
A business broker can provide valuable assistance with tax-related matters after you've sold your business. First, they can help you navigate the intricate tax implications associated with the sale, including correctly categorizing various assets, such as inventory, real property, depreciable property, and capital assets. This categorization is crucial because it determines the applicable capital gains tax rates and any potential deductions.
Can I rely on a business broker for ongoing business advice after the sale?
Business brokers are typically transaction-focused, but some may provide limited post-sale advice. For ongoing business-related guidance, you should seek the services of a business consultant or mentor specializing in your industry.
Why is it essential to have a plan for the sales proceeds after selling my business?
Planning for the sales proceeds is crucial to ensure your financial security and achieve your long-term goals. It helps you make informed decisions about investing and managing your newfound wealth.
Should I seek professional help for tax planning after selling my business, or can I handle it alone?
While you can attempt to manage your taxes independently, consulting a qualified tax professional is recommended due to the complexity of tax implications associated with business sales.