A Strategic Exit Isn’t Just About the Sale Price — It’s About What You Keep and What Comes Next.
Selling a small business is often the culmination of years — or decades — of hard work. It’s a major milestone, both financially and emotionally. But many business owners overlook the most important part of the process: what happens after the deal closes.
At Wealthnest, we regularly work with entrepreneurs who are preparing to sell or have recently exited their business. Whether you’re thinking of selling next year or are already in talks with a buyer, here are a few essential tax and retirement planning considerations to help you walk away not just proud, but financially prepared.
1. Understand the Tax Impact of the Sale
When you sell your business, the IRS gets a seat at the table.
Depending on how your business is structured (S-Corp, C-Corp, LLC, etc.), the tax treatment of the sale will vary. Some sales are treated as asset sales, others as stock sales — and each has different implications.
Key considerations:
- Capital gains vs. ordinary income: Not all of your proceeds may qualify for favorable capital gains treatment. Some items (like depreciation recapture or consulting agreements) may be taxed at higher ordinary income rates.
- Installment sales: Spreading the payments over time might lower your tax liability in a given year, but it requires careful structuring.
- Allocation of purchase price: How the sale price is allocated (goodwill, inventory, equipment, etc.) will directly affect your tax burden.
2. Plan for a Potential Tax Windfall
Selling a business can create a one-time windfall that bumps you into the highest federal and state tax brackets. It may even trigger additional taxes like the 3.8% Net Investment Income Tax.
Strategies to consider:
- Charitable giving strategies (like Donor-Advised Funds or charitable trusts) can reduce taxable income while supporting causes you care about.
- Qualified Opportunity Zones may allow for deferral or reduction of capital gains.
- Roth conversions or tax-loss harvesting may also be part of the plan, depending on your timing and income structure.
3. What’s Your Retirement Plan Without the Business?
If your business has been your main income source — and in some cases your retirement plan — it’s time to think about what replaces it.
Questions we help you answer:
- How do I turn this lump sum into a sustainable income stream?
- What retirement accounts should I consider now — IRA, Roth IRA, or even a Defined Benefit Plan before year-end?
- How much should I set aside for healthcare or long-term care planning?
- Do I still want to work or consult part-time, and how will that affect my tax picture?
At Wealthnest, we use your post-sale capital to build a personalized retirement income strategy that accounts for taxes, inflation, estate planning, and lifestyle goals.
4. Don’t Forget State and Local Tax Issues
If you’re an Arizona business owner, it’s critical to understand state-specific rules. Arizona’s state income tax — and any applicable local sales taxes from the transaction — can impact your final proceeds. Planning early allows you to structure around those costs.
In Summary: Selling Is the Beginning of a New Chapter — Not the End of the Plan
Selling your business is a financial opportunity, but also a planning challenge. Without a thoughtful tax and retirement strategy, you could lose more than you gain.
At Wealthnest, our CFP® professionals help business owners throughout Arizona navigate this transition with clarity. We don’t just plan for the sale — we plan for the life you want to live after it. Connect with us today!