How are a charity and the sale of your business even related? One represents the ultimate capitalist success story, and the other is an organization set up to provide help and raise money for those in need. Here’s the link. For many business owners selling your business represents the most significant tax event in your lifetime. Charity represents an excellent opportunity to reduce your tax bill upon the sale of your business.
Minimizing Your Tax Bill
So what can you do about minimizing your tax bill? The usual suspects are to see if you are eligible for the Lifetime Capital Gains Exemption. That only translates into about $900,000 of tax-free money. You can dump money into an Individual Pension Plan (IPP) or a Retirement Compensation Arrangement (RCA). They’re significant advantages, but that’s a tax deferral strategy and, depending upon your eligible room, may not make a big dent in your business’ tax bill.
Charity is Good for the Soul
Charity is not only a great tax haven but also is good for the soul. Even those who aren’t what I call “charity oriented” suddenly feel very charitable when they see the financial benefit. This is a term that Mark Halpern has deemed “Accidental Philanthropists”. When given a choice to write a cheque to the government or donate to a charity, these Accidental Philanthropists realize that charity is their preferred route.
Understanding the Efficiency of Charitable Giving
If donating to a charity correctly, you or your family can remain whole at the end of the day. Many advisors will help efficiently donate to a charity, but you won’t necessarily be whole. It’s essential to understand the most efficient way to contribute to a charity. The way you donate can help maximize your benefit to the charity and maximize your tax efficiency.
Addressing Your Estate Planning
Donating to charity creates some tremendous opportunities to eliminate taxes on the sale of your business but also to eliminate any future taxes on your estate. The sale of your business is also an opportune time to look at your estate and retirement planning. Does the sale of your business translate into a care-free financial future? Wouldn’t you want to know? It’s amazing how many business owners have no idea of their business’s sale’s actual impact on their financial future. Answering a personalized questionnaire and running your financials through specialized estate planning software will give you a retirement cash flow analysis regardless of your age. Wouldn’t you like to know if you’re going to run out of money or not?
Conclusion
Selling your business can result in a significant financial windfall. If you sold your business for $10 million, would you want to write a cheque for $2 million to the government if you didn’t need to write one? Let’s show you how being charitable can benefit you, your family and the causes that you’re passionate about helping.
Author’s Bio
Through the bankruptcy of his first business, a strong balance sheet means nothing unless you can get the money out of your business and into your hands personally, tax efficiently, and creditor protected. Chris helps and coaches business owners to avoid a similar fate as he suffered in his first business.
Through several clever strategies, he illustrates how these little-known vehicles can get money out of your business efficiently, build your corporate brand and create a legacy through charitable means to help make a meaningful difference in the lives of others.
Also, he has seen the impact that mental health can have upon success within your business and your life and how the two are on a constant collision course. When Chris became aware that Entrepreneurs struggled with their mental health at more than twice the rate of average adults, he realized he wasn’t alone and made it his ambition to understand why and do something to help. His business, The Finish Line Group, aims to help support the entrepreneur’s financial, philanthropic, and emotional needs.
Chris’ Why Statement remains, “To openly communicate the lessons learned from my past so that others will thrive in their lives, minimize their setbacks and leave a positive and lasting legacy.”
