Ten thousand people turn 65 every day. With advances in medicine, this could begin the writing of many chapters in your life’s book throughout a long and healthy retirement. Naturally, there is nothing magical about this age and many a successful business owner has retired at 65, 70, 80 or much younger.
For most business owners, their retirement “fund” is the value of their business. Now that it’s time to retire, let’s sell the business and pay all the taxes owed… right? Not so fast, my successful friend. There are legal ways to decrease, avoid or defer that big tax bill. Here’s a quick look at a couple of strategies that may help you reduce taxes when selling a business for retirement:
- Make a charitable gift. If you are reading this and have already sold your business, then you can help reduce that big tax burden by making some gifts to charity – especially cash gifts. Gifts of cash to charity get some extraordinary beneficial treatment in 2021. Keep this in mind if you have already signed or completed the deal to sell your business.
- Make an income-producing gift. You can set up a gift that eventually will benefit charity (either after the passage of time or a person or persons) that pays out income to you or others now or later. Income-producing gifts can be set up for as little as $5,000 and a maximum of…well, there is no maximum. You also can have a varying income from these kinds of gifts. Tax reduction, deferral and other goodies come out of these legal tools as well.
These are just two of the many strategies that you can use to help charities and yourself. Visit with your tax professionals and get started.
Please note, this information is not to be considered legal advice. We encourage you to talk to your tax or financial advisor about these topics.
Tom is CICOA’s corporate and planned giving manager. Through planned giving, he helps donors give to an organization they care for deeply. He is passionate about helping people achieve some of their important financial goals. “We can have their assets work better for them now and also better for CICOA in the future,” he says. Prior to joining CICOA, Tom worked for a company based in Nebraska managing capital campaigns. Before that, he worked for the American Cancer Society for 12 years.