After selling your business, there are a lot of questions and factors that need to be considered. Some of the pertinent questions are: Will my current lifestyle be sustainable? How will I manage my financial position for the future? Is early retirement a possibility for me?
We take a look at what comes during and after selling your business and what you can look forward to in the future. Chartered Financial Planner Mufaddal Travadi explains the steps you can take to manage your finances effectively after you sell your business.
Make a plan for the proceeds of the sale
When receiving a significant sum after selling your business, the amount of money you are faced with can be overwhelming. Creating a bespoke financial plan can help paint a clear picture about where your money will go and can allow you to visualise your future. Whether you will be making strategic investments, philanthropic contributions to chosen causes or allocating a portion for personal consumption, seeing a path for your money is the first step to feeling financially at ease.
We often ask clients to start their future financial plan with an ‘end in mind’, and to think of a clear picture of what they want their future to look like. When considering a long-term plan, you can often get caught in the short term ‘noise’ created by News and Media, which can lead to ‘financial paralysis’. This could result in indecision, which can be dangerous. Although short term issues are a factor in planning, they should be given appropriate consideration in the overall scheme.
Consider the tax implications
It is also important to consider the tax implications that selling your business will have on your overall financial position. Capital Gains Tax (CGT) may need to be paid on any profit you make from the sale of the company and its assets, and this can encompass anything involved with the business including land, buildings, machinery and shares. It may be possible to reduce the potential tax bill by using Business Asset Disposal Relief (BADR), and if applicable, it could reduce the CGT you are required to pay on qualifying assets down to 10% up to a lifetime threshold of £1 million.
Retirement planning
After creating a cash flow plan, you will be able to establish if an early retirement is a possibility for you following the sale of your business. Ideally, you will be looking at a retirement that spans several decades, so it is important to determine whether this is feasible and sustainable in the long run.
When planning for your retirement, it is important to embrace the post-sale journey. Financial freedom creates the opportunity for reinvention and personal growth, the chance to take up new hobbies and get back into old ones. You will also be given the time to find a new excitement and purpose for the path ahead. Take a look at our recent case study to see our financial planning services helped two clients achieve their goal of retiring early into financially secure retirement.
Cash flow planning
When selling a business, it is important to map out what your life will look like in both the short- and long-term future to better understand your lifetime consumption. Creating a cash flow plan is a great way to visualise how your assets will be utilised to meet your personal spending goals and needs, and to see if these goals are achievable over time.
How our financial planning services can support you in your business sale
Receiving ongoing financial services and advice are important after the sale of your business, as there may be a change in circumstances, legislation and investment markets year on year. At Everlong Wealth, our team of Chartered Financial Planners can advise you at all stages of your business sale and continue to support you long after.
Get in touch with us today to see how we can help you.
