Consider This Typical Scenario:

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A business owner commits decades to building a profitable and successful business. As you know, those years have been filled with personal and family sacrifice, long hours, sleepless nights, and countless employee issues. The good news is that effort has produced a profitable and growing business, a loyal and well trained group of employees, and a consistent customer base.

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Without realizing it, one of the other and perhaps most costly sacrifices that Business Owner made was NOT utilizing advanced tax planning to use the business as a tool for properly building Personal Wealth and Retirement Planning.

 

It really wasn’t Business Owners fault; he was following his CPA’s advice and set up a 401(k) plan. After years of funding, a withdrawal to help with daughter’s college tuition, and a few years where to 401(k) lost value – there was not nearly enough to properly and fully fund Business Owner’s retirement.

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Clearly, the hope was that this business owner’s retirement was going to be funded by the sale of the business.

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The Good News 

​After quite a bit of hassle – both finding what the Business Owner thought was a good “Business Broker” and a buyer that could get funding – Business Owner sold the business for $1,000,000.

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The Bad News

​Business owner relied on the “Business Broker” and a CPA to provide advice on how to structure the sales transaction and the language and terms that were used in the purchase agreement. The result – the amount that Business Owner ACTUALLY REALIZED from the sale of the business – after being reduced by TAXES, buyer friendly terms, the time value of money, brokerage and other fees, and MORE TAXES, was considerable LESS than the $1,000,000. In fact in this case, the amount that was actually deposited into Business Owner’s bank account was closer to $500,000.

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The Problem

​There is no way that the after-tax sales proceeds and Business Owner’s 401(k) will fund 30 years of retirement. Unfortunately – that’s all the Business Owner had to show from all those years of work!

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The Solution

​Engage a group that can provide proactive advanced tax planning that will develop, educate, and implement strategies that will enable you to pull value out from the business to build your personal wealth on an annual basis. Obviously the more years that you take advantage of advance tax planning the better. You must avoid trapping value in the business – much of which will be lost when you sell it. The sooner you, as a Business Owner, understand the difference between Tax Compliance (Filing tax returns) and Tax Planning (Building Wealth) the better you will be.