Small business owners will have to constantly be occupied by their day to day activities. Meeting financial goals, achieving sales and maintaining operational activities will sway their thoughts on the future. Once the end is coming and retirement within sight however comes a crisis that without preparation can become hard to handle and retirement can become a far-off dream.
Paired with the qualms of retirement, selling a small business is often a challenging, fickle, and complicated experience. A TD Bank survey reveals that almost half (47%) of small business owners do not have a retirement plan in place.
“Before anything else, preparation is the key to success.” — Alexander Graham Bell.
Mark Sing of Wealth and Success Financial Planning offers critical advice on how to minimise uncertainty and get the most out of it.
Set a goal, and work towards it. The earlier you plan for the sale of your business, the more value you will gain. Trying to juggle the tasks of selling a business, addressing the day-to-day demands of running it, and retiring from it, and can mean that none of these responsibilities are managed properly.
Manage capital gains tax
Know the benefits that are available to you. Selling your business may mean that you are eligible to claim certain capital gains tax (CGT) concessions. These concessions reduce or eliminate any taxable capital gain on the sale of your business.
Maximise super contributions
If you are like many small business owners, you have probably used most of the profits from your business to service debt and/or fund the next growth stage, which means you may not have been able to make further contributions to your super.
Address other advice issues
While boosting your super would be a top priority, there are a number of other issues you may need to address when it comes to selling your business and planning for retirement. For instance, you may need to:
- decide where to invest sale proceeds that can’t (or shouldn’t) be put in super
- unwind or reassign business insurance policies, such as those used to fund a Buy Sell agreement
- pay-off business loans and release guarantees
Written by our contributor Mark Sing, a more detailed version of how you can prepare for retiring from small businesses can be found in our second issue! Coming out soon.
Journo for ECX Magazine