Here are some suggestions that you can practice once you sell your business.
Selling a business can be an exciting time but make sure you are prepared to handle the new-found cash flow. After a business owner sells their business, they can become immediately cash-rich. The large influx of capital can cause challenges for maintaining your standard of living over the long term. It can also cause challenges with cash flow.
So how do you handle the newfound cash flow and how can you get the most out of the revenue from your business? Here are some suggestions that you can practice once you sell your business.
1. Take your time and celebrate your achievement.
You created a business and sold it for a large sum of cash. Acknowledge the fact that you’ve achieved this great feat and take your time to celebrate it with your family, friends, employees, or any other important person in your life. This will give you a sense of accomplishment and it will also help you to be prepared for the next steps.
Celebrating will give you a sense of accomplishment and it will also help you to be prepared for the next steps.
2. Recognize what things are going to change.
Selling your business is a major event in your life and it is going to change a few things. Identify what has changed and prepare yourself for it. You have to make sure that you are aware of these changes. You can also benefit from hiring an experienced tax or financial professional to help you manage the cash flow and tax concerns over the long term.
- What lifestyle changes are you going to make?
- How will you handle the cash flow and increase in income?
Selling your business is a major event in your life and it is going to change a few things.
3. Work with professionals who can help you manage your money.
CPA, CEPA®, and CPWA® professionals understand the tax implications of selling a business and what you need to do before, during, and after the sale to help ensure that you maximize your income and minimize your taxes.
You also need to work with financial professionals who can help you establish short-term and long-term goals for your wealth.
These goals may include:
- Establishing an emergency fund and cash flow plan
- Building up retirement savings accounts
- Paying off any debt you now have
- Using your new investment to start another business or work towards a new goal
CPA, CEPA®, and CPWA® professionals understand the tax implications of selling a business and what you need to do before, during, and after the sale to help ensure that you maximize your income and minimize your taxes.
4. Set financial goals.
You should set financial goals so you can better understand how much money you have to work with both in the short-term and in the long run. These short-term goals could include paying off debt, catching up on savings, or planning for retirement. You could also use your newfound wealth to start another business or work towards a new goal that you may have.
These long-term goals could include financial freedom or the ability to completely retire (or semi-retire) early. You could also use your newfound wealth to give back to society, charities, or any other cause that’s important to you.
You should set financial goals so you can better understand how much money you have to work with both in the short-term and in the long run.
5. Keep up good recordkeeping habits after selling your business.
You’ll want to keep up good recordkeeping habits after you sell your business. If you maintain proper documentation, it makes tax compliance much easier for CPAs and financial professionals when they work with you. The documentation should include
- Any information received from the buyer
- Invoices or receipts for any items purchased with the money
- The tax return filed after the sale of your business and all schedules and statements attached to it
- Other documentation like bank statements, credit card statements, check registers, debit card records, etc.
When you work with a CPA or financial professional to help manage your finances after selling your business, they can also help you keep up with your recordkeeping efforts.
If you maintain proper documentation, it makes tax compliance much easier for CPAs and financial professionals when they work with you.
6. Talk to your family and friends.
If you are a first-timer or have some confusion regarding any of the steps, talk to your family and friends about what you are getting into. You can benefit from their input on how they manage their money so you’ll know what things to do or stop doing to maintain your lifestyle after selling your business.
They can also suggest which firms and professionals you should seek advice from to help you with your money, manage your cash flow, and build up a retirement fund. Your family can also guide you on how to establish short-term objectives that might include paying off debt or starting a family fund.
Your family can also guide you on how to establish short-term objectives that might include paying off debt or starting a family fund.
How Mission Wealth Can Help
Selling a business might feel like a lot of fun but it can be a huge challenge as well. Managing the cash flow and tax consequences of this transition will help you maintain your lifestyle. Working with reliable professionals to manage your finances is a smart move that you should consider.
Are you looking for a personal CFO so that you can focus on running your business? We can help you manage your personal finances as well as your business. We help CEOs, business owners, founders, partners or proprietors of a business who want more time, education and advice.
Running a business can be all-consuming, leaving little time to plan for your financial future and your family’s security. We can help you make sure that your personal finances are in order and that you’re able to reap the financial benefits and tax advantages that ownership may afford. We will help you discover which wealth transfer strategies work best in your situation. At the same time, we coordinate with your other professional advisors, including accountants, attorneys and bankers. We work as your personal CFO so that you can focus on what you do best — running your business and enjoying your life.
Mission Wealth has been financially advising business owners for nearly 20 years. Through our holistic financial business planning approach, we create a plan that encompasses all aspects of your business finances and outlines the steps required to meet your short and long term goals. This plan becomes the blueprint upon which we build your portfolio. At Mission Wealth, our advisors offer insight and prioritization of your personal goals and aspirations.
To learn more about our business planning services contact us by using the form below for a FREE, NO-OBLIGATION consultation with an advisor.
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