How Can Early Tax Planning Save You 75% Taxes on the Sale of Your Business?

I’m not naive to think that future tax planning is on the priority list for most business owners. It would be a stretch if tax and estate planning ranks in the top 50 items on an entrepreneur’s to-do list. It may not be a priority today, but if it could save you 75% of your tax bill on the sale of your business, would you change the importance? Planning for the future of your business is like creating a money plan for what comes next. You're running a business, and you might want to sell it one day. Selling a business is like playing a game—you're unsure if you'll win or how much money you'll end up with. Estate planning is like having a backup plan for that game.

Let's say selling the business doesn't happen or doesn't bring in as much money as you hoped. Your estate plan helps ensure you still have enough money for retirement. It's like having a roadmap that guides you to financial security, no matter what twists and turns your business journey takes.

Now, consider this fact: 90% of business owners need some or all of the money from selling their business to retire. But here's the catch—only 80% of businesses that are put up for sale sell. This tells you how important estate planning is before considering selling your business. Whether your business sells or not, the truth is you'll need a plan for your retirement income.

“The road to success is paved with the bricks of foresight, not the pebbles of regret.”

So, why is planning early a good idea? Well, imagine you sell your business and later realize you must write a big cheque to the government for $2 million. Ouch! If you'd planned, you could have reduced that tax bill by up to 75%. The sooner you plan, the more options you have to consider.

Sometimes, I get calls from business owners after they've sold their business and are facing a hefty tax bill. It's like wishing you'd saved money for something important but didn't. Now, you must write a big cheque, and that's not fun. Some business owners invest within their company, and this passive income can be taxed greatly. But what if you could put this money into a plan where it won't get taxed and it won't mess with your business taxes? That sounds like a good deal, right?

Estate planning is like creating a money safety net for your future. It's about ensuring you have enough for retirement, no matter what happens with your business. So, if you're a business owner, thinking about the future now can save you a lot of headaches later..