You just sold your business—now what? We can help with these immediate steps to take after selling your business, like how to tell your employees and what to do with the sale proceeds!
Tell Your Employees
After finalizing a deal to sell your business, the first step is to inform your employees. Some owners want to tell their employees while the sale and negotiations are ongoing as a heads-up. This often does more harm than good, as employees may worry about their positions and ask the owner questions they cannot answer.
The best strategy is to wait until closing and finalizing the deal before informing your employees. Then, inform key employees, like managers, first so they can help with the transition and the reveal to the rest of the team.
Figure Out Your Taxes
Tax penalties are key considerations when selling your business. Depending on the structure of the sale and the type of business, you may need to categorize every asset of your business into a capital asset, inventory, real property, or depreciable property.
Owners can also figure out a structure for tax payments instead of paying the entire capital gains tax and other taxes upfront. Odds are, the owner will have to pay a significant tax bill. Fortunately, they can ease the tax burden depending on what they do with the sale proceeds.
Decide What To Do With the Proceeds
One of the immediate steps to take after selling your business is figuring out what to do with the sale proceeds. One way to put the proceeds to use and avoid common tax pitfalls when selling a private practice is to funnel those proceeds into an Opportunity Zone reinvestment.
If you do this within six months of the sale, the IRS will defer capital gains tax payments until at least 2026. This way, you can immediately put your proceeds to use as an investment for years as passive income and pay off the taxes down the line.
Establish a New Income Stream
Another reason to consider reinvesting sale proceeds immediately into the Opportunity Zone is to establish a new income stream. After years or decades of owning a business as a reliable source of income, you’ll need to transition to a different income stream and wealth management after selling.
Instead of earning a salary and benefits, you should find a new income stream based on investments or other assets to pay your monthly bills and expenses. This new stage of life requires another form of income to pay the bills.