If you currently own a business and are anticipating selling it in the future, you need to look back at your foundational documents including any buy/sell agreements to determine whether or not guidelines are already established.
There are five crucial financial planning areas that you need to consider when planning to sell your business. First of all, you need to articulate your plans for the money, including whether you plan to make major purchases, your future retirement goals and to generate a new vision for your future.
You may also wish to accelerate college funding and charitable giving with college savings plans, or a donor-advised fund. Required cash reserves and estimated taxes should also be in the back of your mind. If you sell early in the year and the tax is not due until April 15th of the year following, you’ll still want to have a long-term game plan for what to do with your taxes.
Key man insurance or personal liability insurance should also be reviewed carefully when it comes time to pass on the business. Many of these policies are owned by the business entity and the business remains the primary beneficiary if the key man passes away. If you are the primary owner of the entity then you have the eligibility to change the beneficiary and the ownership on these policies, and this is a step that you should take as soon as possible to protect yourself.