financial checklist for exiting your business (5 tips to ensure paying yourself more)
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A Third Party Company Buyout or Winding Down A Company

It’s incredible how many business owners think they can sell their business to a third party especially at the twilight of the business owners’ career and with an ideal plan of getting out of the business in the next couple of years. Firstly, has the business owner created a saleable asset with the business to an outside party. Secondly, has the business owner been successful in having the business run without them. Thirdly, is the business owner one of the largest assets of value to an outside company and if so, how valuable is the business without he/she within it? Fourthly, is a third party company willing to write a cheque for the amount that the business owner wants? Fifthly, does your business meet the CRA criteria for selling your business and qualifying for the Personal Capital Gains Tax Exemption?

A business owner needs to look at winding down the business as his/her primary focus first, and if a third party company wants to buy he/she out then it’s only considered a bonus. This is if the sale to a family member or a key employee is not a viable option.

So many business owners see their business as their main retirement vehicle however, many feel it is contingent upon selling it to a third party. Most don’t have that third party plan or know where they will come from.

By utilizing your business as an Insured Retirement Plan, it takes off the pressure of finding an outside company to buy your business. If set up properly, your Insured Retirement Plan determines your business “finish line” and not the necessity of getting an outside buyer to determine your exit from the business.

The other factor is cleansing your business to qualify for your Personal Capital Gains Tax Exemption. Many business owners have a considerable amount of passive income within their business. In order to qualify for the Capital Gains Tax Exemption when selling your business, the ratio of active to passive retained earnings needs to qualify. By utilizing a Personal Pension Plan, you can terminally fund your pension which will help to cleanse the company for its active income requirement thus qualifying for the PCGTE.