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Business Owners: Plan for Next Phase of Life
As a business owner, you’re always thinking of what you need to do now. But you can’t forget about the future – yours and that of your business. So it may be a good idea to consider your personal retirement plan and business succession strategy.
Let’s start by looking at a few retirement plan possibilities:
A financial professional can help you choose the appropriate retirement plan. But you’ll still need to think about succession planning. Of course, you can always sell your business outright at any time you like. Or you could leave your business to your children in your will, but if you give it to them gradually during your lifetime, you can become more confident they’ll be able to manage the business on their own.
Another alternative might be to transfer the business with a buy-sell agreement, which allows you to determine when, to whom, and at what price you can sell it. Because you can establish the purchase price as your business’s taxable value, a buy-sell agreement is useful in estate planning. If you want to keep the business in your family, you might want to consider funding the buy-sell agreement with life insurance, so family members can use the death benefit proceeds to buy your ownership stake.
In any case, given the complexities and tax issues involved with succession planning, you’ll need to consult with your legal and tax advisors when creating a strategy. But don’t wait too long. You can’t predict the future, but by planning ahead, you can help achieve the outcomes you desire.
This article was written by Edward Jones for use by your local Edward Jones Financial Advisor.
Business Owners: Plan for Next Phase of LifeShort /Radio version:
PSA: Business Owners: Plan for Next Phase of Life
As a business owner, you’re always thinking about today. But you can’t forget about the future – so consider your retirement plan options.
For example, you could establish a Solo 401(k), which offers many of the same advantages as a traditional 401(k), including a range of investment choices, tax-deductible contributions and potential for tax-deferred growth.
You might also look at a SEP-IRA, which is funded with tax-deductible dollars. Or you could even set up a pension for yourself, known as a solo defined benefit plan.
A financial professional can help you choose the appropriate retirement plan. But you’ll also need to think about succession planning. How will you exit your business?
You might want to leave it to your children or give it away gradually. Or you could establish a formal “buy-sell” agreement that strictly defines the terms and timing of your sale.
Given the complexities and tax issues involved with succession planning, you’ll need to consult your legal and tax advisors. But don’t wait too long. You can’t predict the future, but by planning ahead, you can help achieve the outcomes you desire.
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