As a successful business owner, you have a never-ending list of decisions to make. Unfortunately, one of the most impactful business decisions you’ll ever make is often one of the last ones business owners tend to consider: How you’ll retire from ownership and protect your financial future in the process. 

At Cook Wealth, our small business financial advisors help owners position their companies for long-term success and a smooth transition—before it’s too late to make a tax-smart, satisfying decision. 

Whether retirement is around the corner, or decades away, here are three steps we help our clients take as they prepare for successful succession. 

1. Growing with succession in mind

Even if you expect to continue running your business for twenty more years, it’s never too early to think about succession planning. Starting early allows you to draft a detailed succession plan that fits your retirement goals, eases the transition, and positions your carefully built company for ongoing success after you leave. 

There’s an often-underestimated benefit to planning for your business’ sale or transfer long before the situation arises. Business owners who have a clear plan in mind—even if it’s decades down the road—tend to make wiser long-term decisions along the way. Instead of operating without a plan and running your business day-by-day, this built-to-sell mentality not only prepares your business for a high-value acquisition, it will likely make your business more profitable in the meantime. 

2. Structuring your business for tax efficiency

Another significant aspect to consider as you move closer to selling or passing down your business is tax efficiency. How you structure your small business has a significant impact on your tax liabilities when it’s time to activate your succession plan. 

In some cases, one of the most tax-savvy moves you can make is to put your business in a trust. We’ve worked with clients who failed to move their business into a trust early on—and their children ended up owing millions in inheritance taxes that could have been avoided. But by establishing that trust early on, before your business is worth a small fortune, you can shelter your family from some of those sky-high inheritance taxes.

Establishing a trust is one way to manage your tax efficiency, but it’s not the only option. Restructuring your business from an LLC to an S-Corp may be another way to minimize your tax burden in the short-term and protect your company’s earnings over time. 

Here at Cook Wealth, our financial planning-minded CPAs help clients find tax savings opportunities, optimize their earnings, and keep more of what they make. That’s why we strongly recommend business owners work with a responsive and proactive business CPA before their business booms. 

3. Developing a retirement plan that aligns with your succession plan

Retirement planning and succession planning should go hand-in-hand. After all, they usually happen simultaneously! That’s why it’s important to have a clear plan for how you’ll sell or pass down your business, the minimum sale price you can accept and still retire comfortably, and how you’ll invest those earnings without incurring an unnecessarily high tax bill. 

Here are a few of the retirement and succession planning questions we often work through with our clients: 

  • How do you envision your ideal retirement from this business? Do you expect to launch a new business and continue earning income through freelance or consulting work, or are you ready to travel, volunteer, and enjoy what you’ve earned?
  • When do you ideally want to retire?
  • What tax implications should we consider—whether you sell the company, pass it down, or put it in a trust?
  • What does a win look like, in terms of succession?

There’s no one-size-fits-all answer to these questions. But as you think through them, your ideal succession plan will begin to take shape.

Looking for a proactive and responsive small business financial advisor? Call Cook Wealth. 

Our team of financial advisors, wealth managers, investment managers, and tax professionals see what others miss—so you can keep more of what you earn. To learn more about our proactive, protective, and tax-optimized strategies, book an intro call with our team.