You know the old saying: “Debt forgiven is income earned.” The IRS agrees. But like most things in the tax world, the truth depends on why and how that debt disappeared.
Selling Your Business? How You Receive the Money Matters.
Selling Your Business? How You Receive the Money Matters.
By Brian Wheeler, Director of Wealth Management & Business Brokerage
If you’re preparing to sell a business that you’ve spent 20 or 30 years building, you’re probably spending a lot of time thinking about one number: the sale price.
That’s understandable. But I’ve found that there is another number that deserves almost as much attention.
The Number That Matters After the Sale Price
How much of the sale price will you actually keep?
Consider an owner who sells a business for several million dollars with very little remaining tax basis. Receiving all of those proceeds in one year could create a significant taxable gain. You may have negotiated a great price for your business, only to discover that how you receive the money has a significant impact on what ultimately stays in your pocket.
Spreading Payments May Spread the Tax Impact
That’s where a Structured Installment Sale can become interesting.
Instead of receiving the entire purchase price at closing, a seller may be able to take the cash they need today and structure the balance into payments over 10, 15 or 20 years. If properly designed under the installment-sale rules of IRC Section 453, the taxable gain associated with those future payments may also be recognized over time rather than entirely in the year of sale.
Think about that for a moment. If you don’t need all of the money today, does it make sense to potentially pay tax on all of the gain today?
You May Not Have to Finance the Buyer
There is another part of this strategy that I find equally compelling. A business owner might hear “installment sale” and immediately think, I don’t want to finance the buyer for the next 15 years. I wouldn’t blame them.
That’s not what we’re talking about.
With a properly structured arrangement, the buyer can fund the applicable purchase price at closing and move on with the business. The structured portion is then used to fund the seller’s future payment stream. The seller isn’t relying on the new owner to successfully operate the company for the next decade or two in order to make those payments.
For someone approaching retirement, that can be an interesting combination: liquidity today, predictable income tomorrow, potential tax benefits over time, and less exposure to the future financial condition of the buyer.
Of course, this isn’t the right answer for every business owner or every sale. There are specific tax and legal requirements, and your CPA and other advisors should be involved in determining whether the strategy makes sense.
There is also one very important catch.
Timing Is Critical
You need to have this conversation before the sale closes.
The buyer needs to participate in the arrangement, and the structure generally needs to be established before you take possession of the proceeds. If the money has already landed in your bank account, you’ve likely lost the opportunity to go back and restructure how you received it.
So, if a business sale may be somewhere in your future, I’d encourage you to think beyond simply asking, “What can I sell my business for?”
Questions to Ask Before You Close
Ask a few more questions.
How much cash do I really need at closing?
Could spreading some of the gain over time improve my tax picture?
And if I want income from my business sale for the next 10 or 20 years, do I really want to depend on the buyer to provide it?
Selling your business isn’t just about getting the highest price. It’s about what happens to that money after the business you’ve spent a lifetime building is no longer yours.
If you’re thinking about selling in the next few years—or already have a buyer at the table—let’s have the conversation before you close. There may be opportunities available today that won’t be available after the transaction is complete.
Structured installment sales involve legal, tax and financial considerations and may not be appropriate for every transaction. Installment-sale tax treatment is subject to applicable requirements under IRC Section 453. Business owners should consult with their tax and legal advisors before implementing any strategy.
Did You Build a Business… or Did You Buy Yourself a Job?
Did You Build a Business... or Did You Buy Yourself a Job?
By Brian Wheeler, Director of Wealth Management & Business Brokerage
Let me ask you a question that may be a little uncomfortable: If you disappeared from your business for the next ninety days, would your company keep growing… or would it simply wait for you to come back?
Most business owners don’t like that question because they already know the answer.
Leadership or Dependency? Know the Difference
The irony is that many owners wear their indispensability as a badge of honor. Every important decision runs through them. Their customers want to talk to them. Their employees rely on them. They solve the biggest problems, approve the biggest purchases, and hold the key relationships. It feels like leadership.
But what if it’s actually dependence?
I’ve met plenty of business owners who have built impressive companies with loyal employees, growing revenues, and years of hard work behind them. From the outside, they look successful. Yet underneath, many have unknowingly created something very different.
They haven’t built a business that works for them—they’ve built a business that can’t function without them.
That’s not freedom. That’s a very demanding job.
A Stronger Business Starts with Letting Go
The surprising part is that the path to a better business and a more valuable business is often the same. It starts by intentionally reducing the owner’s dependency. That doesn’t mean becoming less important. It means building a company that’s strong enough to succeed because of the team, the systems, and the culture you’ve created—not because you’re present every minute of every day.
Great employees become trusted leaders. Clear systems replace tribal knowledge. Customer relationships are diversified so the business isn’t dependent on one or two key accounts—or one owner’s personal relationships. Decision-making is shared with capable people who have earned that responsibility. Those changes don’t just make the owner’s life better; they make the company stronger.
And here’s where it gets interesting. Those are the exact qualities sophisticated buyers are looking for. The business becomes more profitable because it operates consistently. It becomes more resilient because it doesn’t rely on one individual. It becomes more attractive because a buyer can envision success continuing after the transition. And perhaps most importantly, it gives the owner something many entrepreneurs haven’t experienced in years—options.
Whether you plan to sell in two years, twenty years, or never, that’s a worthwhile goal.
From a wealth planning perspective, this matters even more than most owners realize. For many entrepreneurs, their business is their largest asset. The decisions you make today about leadership, systems, client diversification, and owner independence don’t just affect the future sale of your company—they influence your retirement, your tax planning, your estate plan, and ultimately the legacy you leave behind.
That’s why I don’t believe exit planning starts when you’re ready to exit. I believe it starts the day you decide to build a business that’s capable of thriving without you.
Final Thoughts
So let me leave you with one final question:
If someone offered to buy your business tomorrow, would they be buying a valuable company… or would they really just be hiring you?
If that question gives you pause, now is the perfect time to find out where you stand.
Keystone Business Brokers is currently offering complimentary business valuations.
Even if selling isn’t on your radar today, understanding what drives the value of your business can help you make better decisions today, create more freedom tomorrow, and put yourself in the strongest possible position whenever that next chapter begins.
From “Just Sold” to Tax Strategy: How a Commercial Property Acquisition Can Create Immediate Cash-Flow Benefits
You know the old saying: “Debt forgiven is income earned.” The IRS agrees. But like most things in the tax world, the truth depends on why and how that debt disappeared.
What If Your Biggest Financial Risk Isn’t in the Stock Market?
What If Your Biggest Financial Risk Isn't in the Stock Market?
By Brian Wheeler, Director of Wealth Management & Business Brokerage
Every time the market becomes a little more volatile, my phone starts ringing:
“Brian, should we be making any changes?”
Your Largest Asset May Be the One You Know the Least About
It’s a fair question, and sometimes the answer is yes. But I’ve noticed something over the years.
When people think about financial risk, they almost always start with the stock market. We worry about interest rates, inflation, taxes, elections, tariffs, and whatever headline happens to be leading the news that week. Those things certainly matter, but I’ve often found that the biggest financial risks aren’t the ones making headlines.
For many business owners, the largest asset they’ll ever own isn’t sitting in a brokerage account. It’s the business they’ve spent years, sometimes decades, building. Yet it’s amazing how little time that asset actually receives compared to everything else.
Think about it. Most investors know exactly what their portfolio was worth yesterday. They can tell you whether it was up or down, sometimes to the penny. But ask the same business owner what their company is worth today, and the answer is often, “I’m not really sure.”
I’ve always found that interesting.
It’s not because they don’t care. It’s because they’re busy running the business. Customers need attention. Employees have questions. Vendors need answers. The business demands today’s attention, while planning quietly waits for tomorrow. Before long, another year has passed without asking some of the questions that could have the biggest impact on their financial future.
Questions like:
- If someone approached you tomorrow with an offer to buy your business, how would you know if it was fair?
- If your retirement depends on the value of that business, is it becoming more valuable each year, or just keeping you busy?
- If something unexpected happened to you, would your family know what the business is worth or what comes next?
The Value of Asking: “What Happens If”
One of the things I’ve come to appreciate is that the most valuable planning conversations usually begin with four simple words:
What happens if…?
What happens if you’re ready to slow down sooner than you expected? What happens if your children decide they don’t want the business? What happens if your largest customer leaves? What happens if your management team isn’t ready to operate without you?
Most owners don’t spend much time thinking about those questions because they aren’t urgent today. But neither was estate planning before someone passed away. Neither was succession planning before retirement was on the calendar. Neither was tax planning before December 31st arrived.
The most important planning decisions rarely feel urgent until they are.
That’s one of the reasons I encourage business owners to understand the value of their company long before they’re thinking about selling it. A valuation isn’t simply about putting a price tag on a business. It’s a way of understanding what’s creating value, what’s holding it back, and where there may be opportunities to improve.
Sometimes owners discover their business is worth more than they expected. Sometimes they discover there are a few areas that deserve attention. Either way, they gain something that’s difficult to put a price on: clarity. And clarity creates options.
Final Thoughts
The market will continue to do what markets have always done. It will rise, fall, and give us something new to talk about next month. But your business doesn’t receive a new price every afternoon. That doesn’t make it less important. If anything, it makes it easier to ignore.
So let me leave you with one question:
When was the last time you evaluated the asset that’s likely worth more than everything else you own?
Not because you’re planning to sell. Simply because you deserve to know.
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