Entrepreneurs find success, because they have singular focus. They take an idea and turn it into a full-fledged business. When you are getting started, your energy is devoted to building – planning for your eventual exit is the last thing on your mind. However, the sooner you start thinking about succession planning, the more likely you are to preserve the wealth generated by your business. Our new release, The Great Tax Escape, offers insight into the most common ways separation eventually occurs, and how you can prepare for the most likely scenario, so you don’t lose your profits to taxes.
Building Value vs. Funding a Lifestyle
The first question to consider when you create a long-term business plan is what underlying goal drives your operations? Is your intention to build a valuable company, or are you working to fund a certain type of lifestyle? Whether and how you expand is dependent on the answer to this question. Those that fail to clearly define financial goals often end up stifling growth due to conflicting strategies.
If you are working to fund your lifestyle, a large portion of your profits go towards your personal bills instead of being reinvested in the organization. As a result, your business may not experience a substantial increase in value. This impacts your options when it comes to your eventual exit, and you may not realize the same tax benefits as those who are focused on building the value of their businesses.
Your Certified Tax Coach is an excellent resource as you create your business strategy, providing expert insight on the tax ramifications of your long-term plans.
Options for Exiting the Organization
When the time comes to explore other career opportunities, or you are ready to retire from the working world, you have choices. The most common options for leaving a business include the following: