Making the Sale of Your Business Part of Your Investment Plan
On: 16th February, 2016 // By: admin
Selling Your Business as Part of Your Investment Plan Begins With a Solid Strategy
You’ve spent your career building a solid company. As you near retirement, it’s time to make careful plans to make the transition of ownership part of your investment plan. Finding a buyer that will pay your required price is just the beginning. When you’re closed on the deal, you’ll have just begun the process of managing the sale.
There are several things you should know about successfully selling your business as part of a broader investment plan:
Diversify your proceeds, just as you would any retirement savings. In order to adequately protect the funds that resulted from the sale of your business, you need to diversify the proceeds right away. You will want a mix of stocks, bonds and real estate investments in order to ensure that no one single economic event has the power to erase your years of work building your business. The right mix of your portfolio will depend on your age, risk comfort levels and other factors that you should discuss with your wealth advisor.
Examine stock assets. If the sale of your business included proceeds in the form of stock, you need to evaluate the assets and determine how to protect them from a decline in the stock’s price. Again, this is a time to evaluate diversification options.
Consider your liability. You’ve just stepped away from the sale of your business, and now your pockets are stuffed with cash. Don’t wait to see if anyone might come after that money. Make sure that you have solid primary and umbrella insurance policies. If you have other businesses that are in operation and still in your ownership, take steps to protect those assets from any potential lawsuits. Talk with a qualified tax attorney to determine if you have any exposure that could pose a significant risk to your retirement plans.
Minimize the taxes you pay on the sale. There are many strategies you can use to reduce the amount of taxes you pay on the proceeds from selling your business. You can structure the sale so that you are not hit hard by taxes, receiving stock tax-free, instead of cash. You can also use other strategies, such as selling a losing venture or losing stock in the same year to offset the gains on selling your business. You can also choose to give away some of the proceeds to avoid paying taxes on them, like giving to your favorite charity or giving personal gifts of up to $14,000 to individuals.
Selling a business as part of an investment plan for your retirement often comes with complicated questions and concerns. At Aura Wealth Advisors, we are accustomed to working with clients as they transition through the sale of a business, offering guidance and technical support. Call us to make an appointment to discuss the upcoming sale of your business.