I've worked with enough successful business owners to know that almost every one has the same gap in their plans.

Take a scenario I see all the time: Dave built a widget company from nothing into a $30 million business. He's sharp, disciplined and completely focused on growth.

But when I ask him what his plan looks like after the company's sale, he stares at me like I've asked him to solve a riddle in an unknown language.

Dave isn't unusual. Most successful entrepreneurs pour every ounce of energy into building a business and almost none into planning for what happens when it turns into liquid wealth.

It's not carelessness. Building the company is the priority. If it doesn't succeed, there's nothing for which to plan.

The problem is that by the time the exit is real and there's a signed contract and a closing date, the biggest wealth-building opportunities have already passed. The cost of that timing gap can run well into the millions.

Three things business owners aren't considering

The same three blind spots come up again and again:

• The first is business structure. How the company and the owner's personal stake are organized for tax purposes. Whether you're a C corp, S corp, LLC or LLP affects not just annual income taxes but the tax treatment of any future sale. Get this wrong at formation, and you could be locked in for decades.
• The second is succession planning. For a business to command a strong valuation, it needs to be transferable. This means there is management in place, client relationships are institutional rather than personal, and operations can run without the founder. Buyers pay a premium for businesses they can take over immediately.
• The third is exit and estate planning. This one costs families the most money. A successful sale creates a massive tax event. Without years of advance planning, your options to reduce that burden shrink dramatically.

Why the math gets worse as the business grows

Valuation multiples expand as revenues grow. A company with $200,000 in EBITDA might sell for five times, or $1 million. Scale to $3 million in EBITDA and a 10-times multiple puts the value at $30 million. At $35 million in EBITDA, a 20-times multiple can push it to $700 million.

Industry and revenue quality directly impact these numbers, but the pattern holds: The bigger the exit, the bigger the tax event.

The federal estate tax rate above the exemption is 40%. The current lifetime exemption is $15 million per person ($30 million per couple), which is the most generous in U.S. history.

But Congress can change that number. A sale that pushes your estate above the exemption can trigger an enormous tax bill for your heirs if you haven't planned ahead.

What early planning looks like

If a business owner shows up with a signed purchase agreement and asks what can be done to reduce the tax hit, the honest answer is: Not much. The valuation is set. The structure is locked. The die has been cast, as we say.

The difference between the business owner who plans five years out and the one who plans five months out can easily be eight figures.

Let's revisit Dave's scenario. Five years before his planned exit, we started working on a strategy. Dave created an irrevocable trust for the benefit of his wife and children and transferred 50% of his company, valued at $15 million at the time, into that trust.

When the company sold for $60 million, the trust's half was worth $30 million, and that $30 million was outside Dave's taxable estate.

He paid long-term capital gains of 20% on the sale rather than ordinary income rates of 37%, and by moving assets out of his estate at a much lower valuation years earlier, he avoided what could have been $12 million in estate taxes on the growth alone. All told, early planning saved Dave's family north of $20 million.

Two types of trusts come up most often in these conversations:

• A spousal lifetime access trust (SLAT) is an irrevocable trust that names the spouse as beneficiary during their lifetime, then passes to children and grandchildren. It works well when the business owner might still need access to income or assets from the trust.
• An intentionally defective grantor trust (IDGT) skips the spousal access and goes directly to children and grandchildren.

Both of these options share the same critical advantage: The assets are valued when they go into the trust. For a growing business, that means transferring at a relatively low valuation years before the exit and letting all that appreciation happen outside the taxable estate.

Charitable strategies can strengthen the plan further. Donating appreciated stock to a donor-advised fund — or, for private company shares, to an organization that accepts them — delivers meaningful tax benefits over donating cash. These tools work best when built into the strategy early.

Four things to do now

If you own a business and think you might sell it someday (even if "someday" feels like a decade away) here's where to start.

1. Find the right wealth manager. Look for someone who works specifically with business owners and can help you build a long-term plan that connects your business goals to your personal financial picture. This isn't a one-meeting exercise, it's an ongoing relationship.

2. Assemble your full team and get them on the same page. Alongside your wealth adviser, you also need an attorney and an accountant, all working from the same playbook. These professionals shouldn't be operating in silos. The value comes from coordination. To ensure this, I encourage you to ask your team four questions:

• What is the plan?
• How are we going to get there?
• Who else needs to be involved?
• What are we not thinking about? This is the one most people forget.

3. Start three to five years before any potential sale. This is the window when the most powerful strategies, including trust planning, ownership restructuring, estate tax reduction, are still available to you. If you wait until a deal is on the table, most of those doors close.

4. Execute aggressively. An unexecuted plan is worthless. Once the strategy is in place, move on it. Every year of delay is a year that asset values grow inside your taxable estate instead of outside it.

The future will arrive faster than you think. Time is your single greatest ally in wealth planning but only if you use it.

The entrepreneurs who start early, build the right team and execute with urgency are the ones who keep the wealth they spent a career creating.

The ones who wait? They pay for it.

Related Content

• 4 Retirement Risks Business Owners Often Overlook
• When Starting a Business, the End Is a Very Good Place to Start
• The Entrepreneur's Exit: How to Sell (or Pass on) Your Business Without Losing the Family
• Planning to Leave Your Business? How to Find the Right Buyer
• To My Small Business: Well, I've Been Afraid of Changin', 'Cause I've Built My Life Around You
• The Most Important Number for a Business Owner Considering a Sale

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Harlan couldn’t tell you much about retirement. He didn’t exactly retire in the traditional sense. But he could teach you a lot about self-reliance and determination – traits more older adults are putting into practice today.

He needed both when he started his business. After all, he was 65. But people loved what he was cooking up, so he kept going. Soon, he wasn’t just Harlan. He was Colonel Sanders, founder of Kentucky Fried Chicken.

It’s a familiar story now, and one that more people seem eager to follow.

The title "Founder" on LinkedIn jumped by 69% in 2025 and is up 300% since 2022. Driven by layoffs and economic uncertainty, many professionals are rebranding freelance or consulting work as entrepreneurship.

And while it may seem like a younger person’s game, it’s increasingly common among older adults.

Workers in their 50s and beyond often face challenges finding or keeping traditional jobs, but they’re also living longer, wanting to stay engaged and, in many cases, needing additional income. These older entrepreneurs share many of the same motivations as younger ones: autonomy, flexibility and meaningful work.

Research indicates that about 30% of Americans in their 70s, roughly 1.3 million people, are self-employed. And many are succeeding. According to a 2020 study, a 60-year-old who starts a new business is three times more likely to succeed than a 30-year-old.

But, what happens when you stop? Does becoming a founder help or hurt your retirement?

Whether you’re doing it out of necessity or interest, before you change your LinkedIn title, it’s worth thinking about how your retirement plan may need to change along with it.

The cost of the founder title

Stepping out on your own can feel exciting, full of possibility. But it also means leaving certain things behind.

David Haas, CFP® and founder of Cereus Financial Advisors, established his RIA at age 55 and says the transition can work well if it’s intentional.

"I think it can work out great if it’s done for the right reasons and the founder has considered the option of working for someone else," he says.

What can be overlooked are the trade-offs. You may lose employer-sponsored benefits, including a 401(k) match, health insurance and other forms of compensation. You’ll also be responsible for self-employment taxes and funding your retirement entirely on your own.

In other words, thinking about what you could lose is just as important as what you could gain.

As Natalie Pine, CFP® and managing partner at Briaud Financial Advisors, notes, "Potential mistakes of self-employment later in life typically involve spending money on a dream that drains resources and doesn’t amount to much."

And the costs aren’t just financial. Many traditional jobs provide structure, community and mental stimulation — things that can be easy to overlook until they’re gone.

"Your new venture needs to address those needs intentionally," Mitchell Kraus, CFP® and founder of Capital Intelligence Associates, says, "or you'll find yourself working just as hard for half the income with none of the fulfillment."

Your new retirement toolkit

The good news is that self-employment comes with powerful retirement savings options, often with higher contribution limits than traditional plans.

"The financial mechanics of becoming a solopreneur later in life are actually very solvable," says Kraus.

What works best depends on your income and the consistency of your cash flow. As Haas explains, "If the founder still has to save more for retirement, then it’s vital that they try to do so from the company’s cash flow. The best method will vary by company. The SEP IRA is simplest, and then the Solo 401(k). A defined benefit plan will require a consistent cash flow that few founders can immediately support."

A SEP IRA allows you to contribute up to 25% of your compensation (effectively about 20% of net earnings) or a maximum of $72,000 for 2026, whichever is less.

A self-employed 401(k), or Solo 401(k), functions much like a traditional employer plan, but allows you to contribute as both the employee and the employer. In 2026, total contributions can reach up to $72,000 for those under 50. Catch-up contributions add another $8,000 for those ages 50 to 59 and 64 or older, while those ages 60 to 63 can contribute up to $11,250 more if the plan allows.

For high earners, the difference can be meaningful.

"For those wildly successful," Pine says, "we see tremendous potential to enhance retirement savings with the opportunity not only to maximize a defined contribution plan like a Solo 401(k) but a defined benefit plan in addition if they are self-employed. If they add employees, they can start a new comparability plan that can max [out] owner deferrals based on age while providing a modest retirement for other employees."

Health insurance: The biggest wild card

If there’s one area that consistently catches new founders off guard, it’s the cost of health care. Haas describes it as "one of the biggest thorns."

For those between 55 and 65, the challenge is the Medicare gap. Without employer coverage, many founders must rely on COBRA, a spouse’s plan or the ACA marketplace.

"I was on COBRA when I first started," Haas says, "and then transitioned to a MEWA plan available in New Jersey. In many states, an option like this is unavailable, and you have to look to a spouse’s plan or the marketplace, often at very high cost."

Pine adds that age plays a major role in planning. "Older founders are typically closer to Medicare age, so they need to make sure any plan they adopt accounts for that transition," she says. "Most solopreneurs we work with either use an ACA plan or a spouse’s insurance until they turn 65."

Is your business an asset — or just a job?

Another important question is how you view your business over time. Is it something you’re building to sell or simply a source of income?

In Haas’s experience, most fall into the latter category. "Very few of these companies can be later sold for anything above assets," he says. Many are built around consulting or solo work, meaning the income stops when the founder stops working.

That makes it less of an asset and more of an income stream, something to factor into your broader retirement plan.

For those hoping to build a sellable business, more intentional planning is required, including how the business is structured.

Pine notes that this can have significant implications. "You need to be very thoughtful about entity structure," she says, "as there are meaningful tax benefits if there is significant success down the line."

The psychological trap of the founder identity

For some, the biggest challenge may not be financial, but psychological.

When you build something yourself, it can become part of your identity. That can make it harder to step away, leading to the familiar refrain: "Just one more year."

At the same time, research shows that too much unstructured time doesn’t necessarily lead to greater happiness. Many people derive a sense of purpose from being productive and contributing. That tension can keep founders working longer than they originally planned.

Still, it’s that kind of passion that can make these ventures worthwhile in the first place.

As Pine puts it, "We would only encourage someone to start a business later in life who is passionate about what they are doing. They will have a longer runway that way and enjoy their time even if it isn’t fruitful."

Chances are you’re not building the next KFC. But if your later years are about pursuing something meaningful, becoming a founder might not be such a wild idea after all.

Take it from the Colonel himself: "I just say the moral out of my life is don't quit at age 65, maybe your boat hasn't come in yet. Mine hadn't."

Read More

• Best Jobs for Retirees
• Retirees' Guide to Dos and Don’ts of Business Partnerships
• How Five Retirees Turned Their Passion into a Business
• Things that Surprise Business Owners When It’s Time to Sell

Question: I’m 64, retired, and want to invest $400,000 of my $2.4 million portfolio in a winery I'd co-own with a few partners. Am I crazy?

Answer: Many people look forward to retiring because it typically means a break from the daily grind of work. But there’s a downside to not working — having too much free time.

If you’re starting to feel restless in retirement, you might be interested in starting a business — not necessarily for the money, but to have something meaningful to do with your time.

Let's be honest: Being a vintner sounds like a lot of fun.

If you’re 64 with $2.4 million, you might have enough money for a pretty comfortable lifestyle — especially if you have a nice Social Security check coming your way every month. Do you have enough to invest a good portion of your savings in a co-owned winery?

Clearly, there are some risks involved. Not only could taking $400,000 from your savings force you to change your broad withdrawal strategy, but you could conceivably lose all that money if your business fails.

You'll need to do some due diligence, of course. Wine making is a tough industry these days, according to Silicon Valley Bank, with only 16% of vintners saying their business was "very strong" or "rock solid" in 2024.

Some industry's headwinds might be hard to shake, as younger generations are drinking less, and U.S. wine consumption is declining due to health concerns.

That doesn’t mean investing in a winery is a poor choice, though.

Consider the benefits

While investing in a winery might be risky, Bruce Maginn, adviser at Solomon Financial, says there can be significant benefits.

“Co-owning a winery throughout retirement can have financial and personal benefits,” Maginn insists. “However, you’ll want to ensure the investment isn’t relied on for significant income.”

As Maginn explains, because the wine industry typically moves independently of traditional markets, any income your business generates could provide diversification for your portfolio.

More important, though, is the personal satisfaction you might get from owning and operating that business.

“Co-owning the winery can also give you a sense of purpose and fulfillment while enjoying retirement,” Maginn says. “It can help connect you to your community, create social engagement opportunities, and help keep you mentally active.”

Maginn also points out that a business such as a winery “could be used as a way to create a legacy for your children and grandchildren.”

Recognize and mitigate the risks

There’s no such thing as a risk-free investment, and a winery falls into that category. The risk in this situation, says Maginn, isn’t just losing your $400,000 investment. Rather, you could face additional expenses that eat into your savings even more, such as litigation, partnership disputes, and operational surprises. If you’re going to open that winery, you’ll need to factor these potential costs into your decision.

For this reason, Maginn suggests financing the $400,000 rather than pulling the money from savings.

“If you can borrow at a low percentage rate,” he says, “then the long-term math will likely work in your favor. You will likely have earned more interest than you paid to the lender.”

Adam Spiegelman, founder and wealth adviser at Spiegelman Wealth Management, agrees that the risks of owning a private business can be substantial.

"A winery is not a brokerage account," he says. "Once your money is in, it’s in. If your life changes, the market dries up, or you simply want out, it may be extremely difficult to get your capital back."

For this reason, borrowing may be a better choice than tying up your own money.

Spiegelman also warns that even if you're not relying on your business for retirement income, if it fails, it could have a huge impact on your life.

"If this goes poorly, it may affect mental health, family relationships, or retirement expectations," he says. "Pride and ego often get wrapped up in passion projects more than people realize."

All told, Spiegelman says, "Committing more than 5% [of a portfolio] to a single private winery would make most advisers nervous." In this case, a $400,000 investment represents almost 17% of a $2.4 million portfolio, making it "a very large concentration in a very risky corner of the investment universe."

Be honest about the why

Spiegelman says that in this situation, buying into the winery isn't necessarily the wrong choice. But be honest with yourself and, if applicable, your spouse or family, about why you're doing it.

"If someone loves wine, nature, hospitality or simply needs a post-career purpose, a winery can provide structure, social connection, intellectual challenge, and a reason to get out of the house," Spiegelman says. "But those positives don’t change the underlying risk."

Spiegelman suggests framing the decision as a consumption choice rather than an investment.

"If you treat it like buying a vacation home or a boat — something that may enrich your life but probably won’t enrich your net worth — the math becomes more honest," he says.

Maginn agrees.

“This opportunity could really enhance your retirement,” he insists. “If you approach the investment with a clear head, legal protection and a partner who shares your vision, then it can be a rewarding experience.”

Read More

• Living Solely on Investment Income in Retirement: Can it Be Done?
• The Seven Best-Paying Side Gigs For Retirees
• Turn Your Retirement Hobby into Income: The Pros and Cons
• I Retired at 60 Two Years Ago With $3.1 Million. My 62-Year-Old Wife Still Works Because She Wants to, but She Resents My Free Time. Help!

Let's be clear: You're on the edge of a transformation that will redefine how you work, think and create. This isn't hype. It's a pivotal moment, much like when business first embraced Taylor's Principles of Scientific Management or The One Minute Manager.

The new game-changer is artificial intelligence (AI).

AI is the biggest business breakthrough in the last century. It's not theoretical. It's here, it's real, and it's evolving fast. So, let's lean into it to give us back something precious: time.

After years of advising startups, I can recognize a tipping point when it arrives. Right now, we're at one for time management, and AI is the key.

Kiplinger's Adviser Intel, formerly known as Building Wealth, is a curated network of trusted financial professionals who share expert insights on wealth building and preservation. Contributors, including fiduciary financial planners, wealth managers, CEOs and attorneys, provide actionable advice about retirement planning, estate planning, tax strategies and more. Experts are invited to contribute and do not pay to be included, so you can trust their advice is honest and valuable.

Whether you're a founder buried in pitch decks, a product manager juggling road maps or a solo operator aiming to outperform, AI can lighten your load, sharpen your focus and let you channel your energy where it truly counts.

If AI could put time in a bottle …

Miles Davis once said, "Time isn't the main thing. It's the only thing." Time is your most limited resource. You can't create more of it or recruit it, but you can manage it better. And that's where AI comes in.

The trick isn't just using AI. It's understanding how it can amplify your efforts. Automate the mundane. Speed up research. Draft faster. Dive deeper into analysis.

Don't chase every shiny tool. Identify your bottlenecks and delegate them to AI. Real productivity is about achieving more by doing less of the unimportant stuff. This isn't about taking the easy road; it's about working smarter on a scale we've never seen before.

How AI made my life (and business) better

I'll be honest: Not long ago, I felt overwhelmed. As an entrepreneur, I lost control of my time the moment I launched my company. You think you'll be your own boss? Wrong. You trade one boss for many: clients, customers, vendors — you name it.

I became a slave to my calendar. Every Sunday night, I planned my week. Every morning, I tackled the day's emergencies. In between? Meeting. Call. Meeting. Call. Repeat.

That endless cycle left no room for the work that truly matters: reflection, vision, strategy, leadership. If I'm not doing those, who is? If I'm the CEO but also the dishwasher and the stamp-licker, where's the leadership? Where's the intentionality? Where's the time to build strategic partnerships or lead my team with clarity and purpose?

That's when "buying back my time" became vital, and where implementing AI made a difference.

It's a productivity powerhouse

Pop culture often reduces AI to a chatbot writing your kid's book report. However, let's elevate the conversation: AI is a powerful tool for productivity. It's how I escaped email ping-pong to schedule a 30-minute call. Ten emails to find a time? Not anymore.

AI manages my calendar with more efficiency and intelligence than most humans. That's not replacing someone's job — it's reallocating energy to higher-value work. My admin's time is better spent elsewhere, and so is mine.

Which tasks are made for AI, and which aren't

Here's the real secret: AI doesn't just take things off your plate; it lets you focus on the things only you can do. That's the litmus test I use now. If a task requires my voice, my experience, my leadership, then it's mine. If not? Automate it. Delegate it. Let it go.

We get bogged down in the weeds. We're chasing invoices, answering customer emails, fixing website issues and attending meetings that could have been handled via email.

Meanwhile, the big-picture work — the vision, the strategy, the partnerships that move the needle — waits. And waits. And sometimes never gets done.

If you don't reprioritize and refocus, you end up spending too much time in the business, and not nearly enough time on it. I see it all the time with the founders I advise how to make the shift, but I had to learn this the hard way.

The data doesn't lie. Most business owners spend only about 32% of their time working on the business, but when asked where they want to spend their time, they often say they want to spend more time working on the business.

Nearly three-quarters say strategic thinking, growth planning and leadership are what really matter. And they're right. That's where the magic happens. That's where culture is built. That's where value is created.

Don't leave money on the table

As entrepreneurs, we often miss opportunities when we fail to follow up. I've left money on the table because I never followed up after receiving an out-of-office reply.

AI can nudge me to reconnect, remind me when a contact changes jobs, and help me maintain relationships with personalized touchpoints. That's the kind of quiet, invisible value that compounds over time.

Looking for expert tips to grow and preserve your wealth? Sign up for Building Wealth (soon to be called Adviser Intel), our free, twice-weekly newsletter.

But let's not fool ourselves: Not everything can or should be automated. The gut-check moments still matter. Human context and connections still matter.

Whether it's reviewing a sensitive post before it hits social media or rewriting a note that needs genuine empathy, we can't outsource the essence of who we are. That's our edge.

Time isn't something you spend; it's something you invest. That shift in mindset changes everything.

Invite AI to your next meeting

If you're trying to figure out where AI fits into all this, here's what I tell my team and clients: Start small and start smart. Use it where it makes a difference.

For us, it's not about shortening meetings; it's about making them more effective. People still talk too much. We're human.

But AI is invaluable after the meeting. It captures action items, summarizes key takeaways and flags deadlines I might have casually mentioned but otherwise forgotten.

That's where it buys me back time, not in the moment, but in the follow-through. And when I follow through, that builds trust.

The cost of not investing in your time? It's soul-sucking. You end up on the hamster wheel, busy but unproductive, constantly reactive and never quite getting to the work that moves your business forward. You disappoint yourself, your team and your clients. And eventually, it wears you down.

I measure my success differently now. I know I'm doing it right if I'm well-rested, I follow through, I'm not avoiding my calendar and I can sit down to dinner with my family instead of yelling, "Be right there!" from the other room. That's not just balance. That's integrity.

Want to shave 10 or 15 hours off your workweek?

So, if you're feeling overwhelmed, here's your starting point: Adopt one small AI tool — for meetings, for content drafting, for email management. Use it to free up time for your highest-value work — strategy, relationships and creative thinking.

Don't waste time figuring out if a meeting should be at 2 or 3. Focus on what that meeting is for. That's where the real ROI lives.

Here's the truth: Embracing AI isn't just about learning some shiny new tool. It's about rethinking how we value our time. As entrepreneurs, our calendar is our capital.

When we start delegating routine emails, scheduling, basic research and even first drafts, we unlock hours we didn't think we had.

I'm not talking theory here; I'm seeing it play out every week, five, 10, sometimes 15 hours handed back to people simply by being smart about where AI fits in.

But this only works if we're intentional. It's not about automating everything. It's about choosing what stays human and what doesn't need to be. That gives us back the space to lead, think, build and nurture the relationships that drive growth.

Three AI tools to consider

I asked ChatGPT what the best AI tools are for founders who want their time back. No fluff, no guru advice, just real tools that help with the chaos. Categorized by what they do, I picked three:

• Motion. Automatically plans your day by prioritizing tasks, meetings and deadlines.
• Notion AI. Combines tasks, docs and projects in one smart workspace.
• Zapier. Automates workflows between apps like Gmail, Slack and Airtable.

But you find your own.

The future isn't about grinding harder. It's about being sharper, more focused, more present. And AI? It's not the whole answer, but it's an incredible lever when used wisely.

Start small. Start smart. And start now.

Related Content

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• What is AI Worth to the Economy?
• 10 Major AI Companies You Should Know
• How AI Can Help a Lawyer Work Faster and Less Expensively
• What Are AI Agents and What Can They Do for You?

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

To help you understand what is going on in business, our highly experienced Kiplinger Letter team will keep you abreast of the latest developments and forecasts (Get a free issue of The Kiplinger Letter or subscribe). You'll get all the latest news first by subscribing, but we publish many (but not all) of our forecasts a few days afterward online. Here’s the latest...

Business owners who want to prepare for retirement face two big questions: First, is the business ready for sale (or transfer to the younger generation), and second, is the owner ready?

The former question is fairly straightforward: The basics for raising a business’s valuation include tracking and improving financial performance and recurring revenue streams, building up the management team, helping the business stand out from competitors, diversifying the customer base, and improving access to capital. Boosting these metrics will also shorten a buyer’s due diligence process and speed up the sale, or help launch a family member as the new owner. Many of these steps will take time, so it is essential to plan early.

The second question of whether the owner is psychologically ready to exit can often be more difficult to tackle, since they often gave birth to the business and devoted most of their waking moments to its growth. 75% of former owners experience some regret after the sale or transfer. Much of the owner’s sense of identity is connected to the business. They worry about whether their existing customers will be treated right and if their legacy will be protected, since the business name is typically transferred to the new owners. Sellers face the prospect of giving that up to someone else who may go in a different direction. As part of the sale, they may be asked to stay with the business longer in an advisory or diminished role to ease the transition, which also means a loss of control. When faced with these emotions, owners can procrastinate in their decision-making.

Exit planners can help with both questions, according to exit planning consultants ENNIS Legacy Partners, whom we turned to for advice. Besides the technical aspects, exit planners should also help owners identify their personal goals and values.

The first step is deciding whether the owner is ready to give up control. He or she will likely need to replace the inevitable loss of identity and daily structure with something else. Entrepreneurs who had the drive to build a successful business tend to make terrible couch sitters. The second consideration is whether to sell to the highest bidder, or to a family member or valued employee. That will depend on what the owner needs to get out of the sale to fund their retirement. Financial planners can help with that.

If the owner does not need to maximize the selling price, then selling to a family member or valued employee could improve the odds of maintaining the owner’s legacy. However, this route will often involve formalizing a loan to the buyer, to be paid back out of future revenues. The payback period can often last seven to 10 years, which may sound like a long time if the original owner is dependent on getting their cash out fast. Another drawback is that the new owner may be inexperienced at being the boss, have trouble running the business and default on the loan. The original owner may end up back at square one, trying to sell all over again. Buyers who have never been owners before often don’t realize the amount of stress that comes with being an owner, and may be unprepared for it. Or the buyer’s spouse may not like the impact of that stress on their marriage.

Exit planners will also know which other consultants could be helpful. If the decision is to sell to the highest bidder, then business brokers, similar to realtors, will market the business. Typically, that will include listing the business on a website such as bizbuysell.com. Larger businesses often work with an investment banker instead of a broker.

Attorneys will be needed to review the documents of sale. Tax attorneys and accountants can estimate the tax consequences of the transaction. Owners can be surprised by how much tax is owed. Also, tax considerations are often an area that needs negotiation, since what’s advantageous to the seller may not be to the buyer, and vice versa. Employee pension obligations may need to be offloaded to a third party, typically an insurance company that provides an annuity to covered workers, or the sale price might be adjusted to reflect keeping such liabilities on the books.

Experts at the negotiating table will be needed. Owners tend to think that they are experts at negotiating, but they don’t know what they don’t know, and they will be dealing with buyer’s agents who do these kinds of negotiations all the time and know where to gain an advantage for their clients.

An early pitfall: Owners who intend to sell often overestimate market value because they underestimate how important they are, personally, to the survival of the business. Some businesses may not be sellable and will have to close their doors once the original owner leaves. Owners should use consultants to calculate market value, but can get a rough estimate by looking at previous sales on Bizbuysell.com for the past five years. Offered prices are often typically between two and three times annual earnings, depending on the industry, though they can go as low as 1.4 times for dollar stores and over four times for funeral homes, nursing homes and car washes. 60% of selling prices on Bizbuysell.com ranged from $50,000 to $500,000, but some are in the millions of dollars.

Finally, the current state of the overall economy can affect valuation, since that may determine the new owner’s chances of success. The level of interest rates is important for determining the cost of the deal to the buyer, since financing may be involved. Tariff policy can be important, too: Recent Trump administration tariffs have caused the valuations of small U.S. manufacturing businesses to rise, but retail businesses that depend on cheap imports to make a buck have been hurt.

This forecast first appeared in The Kiplinger Letter, which has been running since 1923 and is a collection of concise weekly forecasts on business and economic trends, as well as what to expect from Washington, to help you understand what’s coming up to make the most of your investments and your money. Subscribe to The Kiplinger Letter.

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‘Golden Visas’ allow individuals to live, work, and study in a country in exchange for a significant investment in that nation's economy. Many of these programs may also provide a pathway to citizenship after a certain period of residency. Still somewhat controversial, options exist for expats, business professionals, and retirees to gain legal residency in another country — for the right price.

Between 2019 and 2024, the number of Americans seeking a second passport or alternative residence abroad surged by more than 1,000%, according to Henley & Partners, a global citizenship and residence advisory firm based in London. Demand has continued to accelerate strongly through 2025 and into 2026.

Dreaming of a new life in another country? A Golden Visa might get you there.

What is a Golden Visa?

Golden Visa programs, sometimes known as ‘residence by investment,’ allow individuals to gain temporary or permanent residency in another country — for a price. After a time, these visas may even provide a pathway to citizenship. In some cases, individuals may not be required to reside full-time in the country, making a Golden Visa the ideal 'plan B' for retirees or anyone who wants to travel, live, work, or study abroad but may not intend to live there permanently.

“A Golden Visa is a special kind of visa that lets you live in a foreign country if you invest a significant amount of money in that country's economy, Adam Dayan, founder of Consumer Law Group, LLC, explains. “This can be through real estate, government bonds, or other investments. It's called "golden" because it offers some really valuable benefits, like residency and sometimes even citizenship.”

Golden Visa programs remain popular, but some countries have chosen to change or phase them out gradually. For example, Portugal removed real estate investment and capital transfers as a means of obtaining residency in 2023, and the Netherlands ended its Golden Visa program entirely in January 2024.

How much does a Golden Visa cost?

That depends. The price of a Golden Visa varies by country and investment type, typically ranging from $250,000 to several million dollars. For example, Greece requires a minimum real estate investment of 250,000-800,000 EUR, depending on the property’s location. Italy’s Golden Visa will set you back between 250,000 EUR and 2 million EUR. Spain’s Golden Visa program ended for new applications in 2025. In Turkey, citizenship by investment requires a minimum of $400,000 in real estate.

“And then you have countries like Malta, where its citizenship program requires an investment of over $6 million, which includes a hefty contribution to the country's economic development and real estate investments,” Dayan adds. “The cost also largely depends on what you get in return. Cheaper options might give you temporary residency with fewer benefits, while more expensive ones provide full citizenship and access to more countries.”

Prices are set by each country and can change, so the “cheapest” programs right now are found in Greece, Turkey, and some Caribbean nations, while premium options in Europe or elsewhere are significantly higher.

Alaattin Kiliç, Investor Migration Branding Expert at Visa Franchise, cautions that the sticker price is just the beginning. "There are also legal fees, taxes, and in some cases, property registration or VAT costs. A good rule of thumb is to budget at least 10%–20% above the official investment amount to cover all ancillary expenses."

Who are Golden Visas For?

Kiliç explains that Golden Visas are ideal for individuals who want a flexible, globally connected lifestyle. "Retirees are a major segment — especially those who want to reduce living expenses, access affordable healthcare, and enjoy a more relaxed pace of life. People who’ve spent years working and saving — and are now looking to stretch their retirement income or simply experience life in a different culture, may just have the greatest appreciation for Golden Visas."

However, critics of Golden Visa programs maintain that these pay-to-play programs are only for the ‘rich and famous’ and can lead to inflated housing prices, absentee homeowners, and allegations of corruption, which some say outweigh the advantages. But Dayan contends that these programs can be a valuable option for anyone who wants to gain residency or citizenship in another country and has the funds to support that transition.

Generally, Golden Visas are designed for affluent individuals interested in moving to another country for various reasons, such as school, retirement, work, or a lifestyle change. Then again, some individuals may apply for a Golden Visa for business reasons. “Maybe they want better education or healthcare options, or they're looking for a safer place to live. It's also great for people who travel a lot and want more freedom to move around," Dayan points out.

What are the best countries to get a Golden Visa?

Some Golden Visa programs have existed for decades. Canada launched its visa program, called the Federal Immigrant Investor Program, in the 1980s. In 2013, Greece and Hungary began their own Golden Visa programs, offering residence permits in exchange for real estate investments. Yet in 2017, Hungary shut down its Golden Visa program amid allegations of corruption and restarted a new version in 2024.

Greece’s program is still active, but the country has significantly tightened its rules, and the investment tiers now range from 400k EUR to 800k EUR in the most popular areas. Ireland, the UK, Malta, and the Netherlands have either ended or tightened the rules around their Golden Visa or equivalent policies. Portugal's Golden Visa program is among the strongest; Italy’s is also active and fairly strong. In 2024, Spain said it would also end its program to increase the number of affordable housing units available for locals. The program has now ended.

Today, variations of these pay-to-play visa programs have been adopted worldwide. Some of the best countries for getting a Golden Visa include:

• Portugal
• Spain
• Greece
• Malta
• Cyprus
• Italy
• Latvia
• Hungary
• Serbia
• Ireland
• Dominica

Several other countries have similar programs, including Singapore, Australia, Austria, Thailand, Canada, Namibia, Luxembourg, Malaysia, Monaco, Panama, and the United Arab Emirates (UAE).

What are the advantages of Golden Visas?

There are many advantages a Golden Visa offers to high-net-worth individuals, professionals, business owners, and retirees looking for options in an uncertain world. Besides providing a way to live in a new country and potentially (but not always) a path to citizenship abroad, a Golden Visa comes with these additional perks:

• Golden Visas allow non-citizens to obtain citizenship in some countries by investing in the country’s economy.
• Foreign investors can obtain temporary or permanent residency and citizenship abroad through the visa program.
• They can provide a safe, stable life with the right to live, work, and study in another country long-term.
• Applicants have the option to send their children to high-ranking schools.
• Individuals and retirees can access advanced medical facilities, possibly with cheaper private health insurance than in the U.S.
• Golden Visas allow individuals to make significant real estate and business investments in another country.
• Golden Visas typically extend to immediate family members, including spouses and dependent children.
• These programs offer currency and market diversity for investors who typically hold all U.S.-based assets.
• Cross-border investments open the door to learning about different cultures, markets, and business and investment opportunities.

What Are the disadvantages of Golden Visas?

Although Golden Visas have many advantages, there are often less-discussed drawbacks that could affect your decision. They include:

• The high initial investment requirements make a Golden Visa out of reach for many people.
• Ongoing costs associated with owning property or managing investments in the host country can quickly add up.
• Some countries do not offer a straightforward path to citizenship, and sometimes, Golden Visa holders can only apply for citizenship after living in the country for a specific period of time.
• Some countries require visa holders to spend a certain number of days in the country each year to renew their visas or maintain eligibility for permanent residency.
• Some programs can change suddenly, with countries tightening their requirements, increasing investment terms, or even abolishing them altogether.
• Depending on the country, Visa holders may become liable for various taxes, including property and wealth taxes, and even income tax if they spend significant time in the country.
• If investing in real estate, the value of the investment could decline due to changes in the housing market, economic downturns, or shifts in local demand.
• Although these programs are designed to be fast and convenient, applicants often face delays, complicated paperwork, and inconsistent legal and language interpretations.
• Critics may argue that Golden Visa programs create inequality by allowing wealthy individuals to “buy” residency.

Is a Golden Visa right for you?

While Golden Visa programs offer an attractive route to residency and sometimes citizenship, they come with notable drawbacks. “The main reason for people to apply for such a visa is to be able to move to another country in exchange for a passive investment that does not require the applicant to work in a certain job or pursue a certain profession,” said Nuri Katz, founder of Apex Capital Partners.

If you think a Golden Visa is the best route for you, weigh the advantages against the disadvantages first to ensure that the benefits outweigh the costs. Kiliç adds, "A Golden Visa is more than just paperwork. It’s a gateway to a new lifestyle for many retirees: one that may be healthier, more affordable, and more meaningful."

President Donald Trump’s latest plan — dubbed the “gold card” — offers foreigners a route to citizenship for the hefty price of $1 million, plus a $15,000 processing fee, while corporations can participate at the $2 million level. Once approved, the cards would grant the applicant permanent U.S. residency, and replace the EB-5 immigrant investor visa program. In December 2025, Trump announced that the program had already reached sales of $1.3 billion.

Related Content

• How to Get Dual Citizenship: Pros, Cons and Steps to Take
• Why (and How) High-Net-Worth Individuals Are Securing Golden Visas to Protect Their Assets
• U.S. Business Leaders are Quietly Plotting Their Escape to Europe: How Will They Get There?
• Considerations for Americans Who Want to Move to Europe
• Setting Up a Business Abroad? 6 Mistakes to Avoid, From a Singapore-Based Financial Planner
• Why 2026 Could Be the Year to Reconsider Global Diversification

An interview with Dr. Lakshmi Balachandra, a professor of entrepreneurship and a fellow in the National Science Foundation’s Technology Innovation and Partnerships Directorate program. 

The pandemic unleashed a flurry of new entrepreneurs. If the economy goes into a recession, do you think that trend will continue? Yes. In fact, history has taught us that it’s typical for economic downturns to coincide with rising rates of entrepreneurship. Necessity is the mother of invention. If people can’t find work or are dissatisfied with their jobs, they’re much more likely to want to start their own business and do something on their own.

Why did the pandemic lead to an increase in individuals going into business for themselves? One of the biggest drivers for entrepreneurship is lifestyle. The pandemic illuminated how challenging work has become for people faced with difficult commutes and the high cost of housing, child care, elder care—the list goes on. It also led to the recognition that your time has incredible economic value that you don’t have to sacrifice when you work on your own. People who become entrepreneurs certainly see an economic opportunity, but the bigger motivation is that they want to be their own boss and set their own hours. You can structure your work in such a way that you gain your own internal rate of return, with the benefit of adding value to your lifestyle. 

Women founders secured only 2.3% of venture capital funding in 2020. What barriers do women and minority entrepreneurs face? This is the question that I’ve been working on and dealing with for over 20 years. Women and minorities aren’t typically seen as leaders or managers or entrepreneurs, so they’re already at a disadvantage, and if anything, COVID made it worse. With networking canceled or limited to Zoom, networking opportunities for people other than those already in the funding network receded.  

How can they overcome those barriers? A lot of how you get funded is based on how you’re evaluated as an individual—meaning what kind of potential do investors see in your ability to understand the market and drive a business to financial success. We’ve done all sorts of things to try to get women and minorities more access to capital, but there’s nothing driving venture capitalists to change the way they do business. They still can get investments from governments and limited partners. There has been a lot of talk about training women and minorities to solve the problem. They don’t need training. They just need money.

What advice do you have for aspiring entrepreneurs? It’s all about conversations. If you want to know how someone was able to build a business, people are often willing to share their story. Find out how they got the start-up capital and whether that’s something you could do. The more people you meet, the more connections you make to learn more. And besides meeting and talking to people, do your research. Learn about what the competition looks like, potential customers’ buying habits, and the rules and regulations for your business. 

Whether out of passion or frustration, the pandemic has seen more people than ever get serious about their side hustle. In fact, according to recent figures from the U.S. Census Bureau, there was a 53% increase in new business filings in 2021 compared to 2019.

However, whether it’s interior design or decorative cakemaking, wedding photography or dog walking, how do you go about turning your side hustle into a real, viable business? Here are five steps to take in order to make the transition as smooth and successful as possible.

1. Set up the proper legal form of ownership.

Remaining a sole proprietorship might mean less admin in the short term, but it also creates a lot more risk in the long term! That’s because any credit, legal or liability risk falls on the individual owner. However, by giving yourself the shield of legal ownership, you’ll ensure the buck stops with your business rather than with you.

Being an official legal entity also gives you more credibility with lenders when it comes to borrowing money or raising capital.  You can consult with Score, the nation’s largest network of volunteer, expert business mentors or with a local attorney to select the right form of ownership for you and your business.

2. Write a business plan.

When you’re running a business responsible for most, if not all, of your income, having a clear strategy is vital, which is where writing a business plan comes in. Doing so will help you identify your vision for the company, decide what differentiates you from competitors and figure out how much you need to earn to produce enough cash to not just survive, but thrive from your side hustle.

If you’re not sure how to go about writing a business plan, don’t worry! There are loads of great resources and advice out there, including from the U.S. Small Business Administration.

3. Plan to hire.

As a side hustler, you’re the accountant, the receptionist, the salesperson, the marketer and more. But becoming a business means deciding when you can afford to bring in extra support to cope with (hopefully!) rising demands on your time. Say your goal is to make a six-figure income every year. If the average full-time working year is 1,900 hours, that means you’re aiming for every hour you work to be worth around $50 to $55 ($100,000 divided by 1,900 hours).

Anytime you perform a function with a typical hourly rate below that – for example, administrative tasks like processing the mail or answering the phones, which tend to pay around $10 to $15 per hour – you’re reducing your ability to earn your desired $50 to $55. In which case, hiring someone to do it instead makes sense, both financially and to help you avoid burning out trying to do everything.

4. Let go to grow.

As you seek to grow, it’s important you have the bandwidth to focus on the elements of the business you’re uniquely good at while letting go of the rest. If you’re a cakemaker, for example, you’re far more valuable meeting customers and creating products than you are sending invoices or responding to emails.

A good rule of thumb is if someone can perform a task at least 70% or 80% as well as you, delegate it. That might be via a part- or full-time hire or through one of the country’s many small-business incubators. These provide expert support on everything from accounting and legal services to HR and capital investment. Along with benefiting from additional expertise, letting go of some operational tasks will mean your time is spent working on the business rather than in it.

5. Equip yourself for big contracts.

Most side hustles start with stuff like selling to friends of friends, posting your products on Pinterest or making one-off sales at farmers’ markets. But as your business expands, you may wish to go after bigger contracts with larger customers. This means you’ll need to establish certain infrastructure to ensure they’re comfortable working with you. Set up proper cybersecurity and data protection, for example, and arm yourself with property-casualty insurance, too. That way, if something goes wrong or gets damaged while you’re working for them, everyone knows you have the necessary protection in place.

Along with the steps above, there’s perhaps one other key consideration for anyone planning to move from part-time side hustler to full-time entrepreneur: Go into it with your eyes open. Running a business is hard, multifaceted work. And usually it comes with the added pressure of needing to make enough money to support you and your family.

Yet, at the same time, picture this: Every day you go to work, you’re doing something you’re good at. Something you feel passionate about. Something that’s truly yours. If you’re ready to accept the ups and downs and put in the time and energy required to make it a success, turning your side hustle into a business may well be the most rewarding decision you ever make.

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

I often receive inquiries from business owners seeking to increase their company’s profitability, margin, etc. Many of them view the business as their retirement plan. Although it’s an asset you could use to fund your retirement, I believe focusing on profitability is shortsighted. By focusing on growing the bottom line, you’re creating a generous income for your present. But what happens once you’ve exited from the business? Unless you’ve increased its intrinsic value, making it an attractive option for buyers, it won’t sell for what you think it’s worth. Even worse, it may not sell at all.

Therefore, don’t focus on increasing profitability. Instead, take a holistic approach that focuses on improving the eight key areas of planning, leadership, sales, marketing, people, operations, finance and legal. By improving each of these areas, you could grow the intrinsic value of the business far more than focusing on increasing profits ever could. Yet, as the business becomes more valuable, it typically becomes more profitable as well. But there is a catch.

By the Numbers

According to the Exit Planning Institute, up to 80% of businesses will never sell. That means that for every 10 business owners reading this, only two of them will be able to sell their business. Perhaps the most concerning part of that statistic is the fact that 80% of the average business owner’s net worth is tied up in their business. Therefore, when it comes time to retire, eight out of 10 business owners are going to find themselves losing 80% of their worth.

The EPI estimates that out of the 351,000 businesses in the middle market, 250,000 — nearly 75% — will attempt to sell by the year 2030. Furthermore, it is anticipated that only 25,000 of those 250,000 businesses will be deemed market-ready when they do go on sale.

When we continue to follow this thread, the picture grows even more dire. A mere 15,000 of the 25,000 will actually sell. Half of the companies that sell will do so without concessions. Therefore, just 3% of business owners will sell their businesses without leaving money on the table in the next nine years. By these numbers, it becomes clear that if you invest all — or most — of your money back into your business you’re taking a massive risk.

It is this very reason that I say, “No,” when business owners come to me, seeking to increase their business’s profitability. We require all business-owning clients who want to employ us for Business Value Growth services to, first, engage us for personal financial planning. Why is this a requirement?

Investing in Outside Assets

As I already mentioned, the statistics surrounding the liquidation of or selling of a business are pretty bleak. Looking at the numbers, it’s clear that many business owners will be left unable to sell their businesses when they wish to exit. Although there are ways to grow the value of the business so that it could be sold, your financial planner must also prepare you for the possibility that your company won’t sell. Does that mean you shouldn’t focus on growing your business’s value? Absolutely not. Increasing the value of the company has benefits and merit regardless of whether it will sell. So how do you prepare for a future that doesn’t go according to your best-laid plans?

The answer is to create a plan B. You have to eliminate every risk in your path. Therefore, you must work with your adviser to put a contingency plan in place. This is why the personal financial plan is so important. Your business is an asset that could be included in your retirement plans. But the responsible thing to do is to diversify by investing in assets outside of your business. You don’t want to be stuck with all of your eggs in one basket.

It’s highly unlikely that your adviser would place all your money into a single asset class. They would be responsible for a catastrophic loss if that asset class suddenly crashed. In fact, I would suggest that they would be derelict of their duties if they did such a thing. Yet, this is exactly what is happening if an adviser allows you to invest solely into your own business.

As financial advisers, part of our duties is to educate clients about the necessity for diversification. This is especially true for business owners. Oftentimes, you don’t look at your business in these terms. It’s time to change your perspective. Rather than seeing your business as the path to the future you desire, you must see that it’s merely a part of that path. The personal financial plan includes the safety net of diversification, so you don’t have all of your eggs in one basket.

Tax Mitigation: A Major Incentive for Business Owners

As a business owner, you can do things with investments that are outside of your business that you just couldn’t accomplish otherwise. For example, by investing a portion of your profits into retirement accounts, you could be investing your most heavily taxed income to greatly mitigate your immediate tax burden.

If you’re in a 27% tax bracket (paying yourself first), by investing funds into retirement accounts, you could effectively remove the funds you’ve invested from that 27% tax burden. By removing the highest taxed funds, you could potentially move yourself into a 15% bracket. Notably, you could also reduce your tax burden on the funds that weren’t placed into retirement accounts, as well.

I have seen tax reductions through proper investing provide an instant ROI of 30% or more, just because of the tax effect. On that basis alone, you’d be hard-pressed to show such an immediate return on investment by reinvesting funds into the business — barring bonus depreciation, which opens another long-term tax concern.

Hard numbers such as these speak volumes. If you’ve been hesitant, perhaps you’d be more inclined to look outside of your business when looking at immediate benefits like this. If you can mitigate your tax bill through smart planning, you can build greater wealth. In turn, this could be used to further diversify, placing you in an even better position for your retirement plans.

The Holistic Approach to Retirement Planning for Business Owners

This is why I require business-owning clients interested in Business Value Growth services to engage with personal financial planning as well. It isn’t a self-serving policy. Instead, it is born from a desire to see you succeed. Although I’ve had clients who didn’t understand this policy when it was first presented, they’ve typically embraced the structure once they understood the big picture and the direct effects.

Owning a business is great. It typically generates an income that can’t be matched by working for someone else. However, it’s my job, as a financial planner, to show you how you could reach your goals under all circumstances. Once you understand how personal financial planning lays the foundation for growing the value of your business, you unlock the potential to experience rapid net worth growth.

On many occasions, I have seen business owners double their net worth every three to five years through comprehensive personal and business planning. Of course, there’s no guarantee that you would experience the same results. But by creating a comprehensive personal financial plan, your financial adviser can help provide a safety net for your retirement in case your business doesn’t sell.

Instead of betting all of your hopes and dreams on the sale of your business, you can use the business as a vehicle to help reach your retirement goals. But it must be part of (and not the foundation of) a larger retirement plan. Investing all your money into the business and focusing solely on increasing profitability will lead to a disastrous end more often than not. You might earn an incredible income while you’re working in the business, but when it’s time to retire, that income will no longer be there.

By investing outside of your business and working to improve its intrinsic value, you set yourself up to reach your retirement goals, regardless of whether your business sells. However, you also stand a much better chance of selling your greatest asset… your business.

Certified Financial Planner Board of Standards Inc. (CFP Board) owns the CFP® certification mark, the CERTIFIED FINANCIAL PLANNER™ certification mark, and the CFP® certification mark (with plaque design) logo in the United States, which it authorizes use of by individuals who successfully complete CFP Board’s initial and ongoing certification requirements.

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Adding another item to your to-do list before the end of the year may be the last thing that you want to think about, unless of course it is going to positively impact your wallet or your mind.

The last few years have been anything but normal, and based on that we have identified three to-dos for you to consider as we close in on 2022. If you are one of the lucky few who have already addressed each of these areas, congratulations, you are doing a great job, and all the best to you and your company for a strong close to 2021.

1. Review your business’s estimated quarterly income tax payments!

Contact your income tax professional to run a forecast of your year-end revenue and expenses. What is your estimated net income going to look like by Dec. 31, 2021, compared with 2020? Do you have a wide gap when comparing your estimated income tax payments against your estimated income taxes due?

2020 was an outlier year — for some company’s revenues were down since then, but many other businesses saw their revenues increase. In the illustration below for “ABC Corp.,” you will see that ABC has had a large increase in net income for their business in 2021 vs. 2020. ABC has not adjusted their estimated quarterly income tax payments throughout the year — which could lead to a nasty tax surprise.

To-do #1: Contact your income tax professional to compare your estimated quarterly tax payments against your estimated income taxes due. Are you prepared?

2. Determine whether you are maximizing your retirement plan deductions.

Should you consider revising your retirement plan for your company? Prior to selecting a retirement plan, seek the guidance of a qualified professional, as each plan has its own requirements and protocol to follow.

Key items, such as when you can make changes to your plans, plan limits, maximums and calendar year deadlines, all need to be taken into consideration prior to doing anything. Once you have completed your diligence, if you are looking for ways to offset net income with an income tax deduction, several retirement plans can be reviewed. Below, find the maximum contributions limits for 2021 on four common retirement plans, of course many others exist that may suit your needs:

*If you are 50 or older, you are allowed an additional retirement contribution that exceeds the statutory limit, known as the “catch-up” contribution.

** Includes profit sharing or money purchase pension plans.

To-do #2: Review your retirement plans. Are you contributing to the plan that is best for you and your company’s situation? Are you taking into consideration the maximum contribution limits in your planning?

3. Take time to reset and refocus.

Abraham Lincoln once said, “Give me six hours to chop a tree, and I will spend the first four sharpening the ax.” The past few years have been especially interesting, and our thinking has been stretched to accommodate the pandemic. The additional responsibilities, creative thinking and keeping our minds on business solutions have put strain on all of us.

Taking time to “sharpen your ax” will keep you fresh, on your game and solid with your decisions.

To-do #3: Perform a mental reset by asking yourself a few questions about your business:

1. What did I learn from 2021? What worked? What didn’t?
2. Is my vision “still” aligned with my priorities?
3. What can I take from 2020 and 2021 to make 2022 my best year?

Although, to-dos are not typically something we get excited about, reconfirming the ideas above could save you time, money and reconfirm your focus and energy going into 2022.

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

“My father, ‘Paul,’ is in a real panic over the sale of the carpet and home furnishing stores in the Pacific Northwest our family has operated for many years. He is 82, in good health physically, but fears the economy is about to turn sour and wants out of the business,” the email from “Dora” began.

“We have noticed a decline in his emotional ‘reserve’ when small problems arise in the business. He avoids dealing with them and caves in, for example, if a customer refuses to pay the balance of their bill. Inventing some artificial excuse, Dad just writes the balance off.

“Now he is negotiating the sale of the business with a potential buyer, and we are afraid of his feeling forced to take far less than what is fair. What do you recommend?”

Do not give in to the fire sale mentality

I ran my reader’s question by a pair of Southern Florida-based wealth advisers, Christopher and Michelle Mackin, a brother-sister team specializing in exit planning.

“This is a common problem we are seeing more often with our country’s aging population,” said Michelle Mackin. “A seller’s fire sale mentality is something that family members need to be aware of.”

I asked them to list what business owners often do wrong when it is time to sell.

Christopher: Fail to properly prepare for the sale

When you don’t prepare, it is likely you will not obtain as much money from the sale as what was anticipated. In part what leads to this is by failing to meet your “earn-out goals” if staff does not continue to perform as before.

Earn-out-goals are what the business must reach during a specified period of time and are different from the sale price.

Even with a firm price in hand, full payment is often subject to the enterprise having met certain financial targets. If these targets are reached, then the final payment is made.

We must not forget that proper preparation requires organizing your books and records, keeping taxes current, having addressed any pending litigation, and, importantly, being sure your staff will remain and want to see continued success.

Michelle: Go about selling your business alone without assistance

Without sell-side advisory support, you will likely not be able to maximize the dollar value of the sale. You could be conned out of your business!

Going it alone subjects sellers to unknown risks. A sell-side adviser digs into issues that can impact market value, as well as potential traps — litigation, things the seller might not even think of discussing with a buyer.

Sell-side advisory support includes:

• An attorney who is experienced with mergers and acquisitions;
• A business valuator;
• An exit strategy adviser who oversees sales team members;
• Possibly an investment banker, or business broker.

Christopher: Fail to know the number that you need from the sale

Lacking sufficient capital from the sale, you may not be able to sustain your lifestyle, have the retirement you had envisioned nor the funds to pursue a new chapter in your life.

Closely related to not having a concrete amount in mind is selling in a panic due to sudden health issues or death. This situation is a welcome mat to being conned.

Whenever possible, time to consider various options is your best friend.

Michelle: Advertise the sale of your business

If your customers see that your business is up for sale, will they continue doing business with you, likely afraid you are leaving?

Instead, work with a business broker who keeps things confidential and not broadcasting the planned sale to employees. Bluntly stated, you need to keep your mouth shut!

Business brokers have a network of buyers who they will reach out to and use non-disclosure agreements. This way, the world will not know you are selling — rather, only those entities that might have an interest in buying your business will be contacted.

Christopher: Assume that all buyers are qualified

Without doing your due diligence, the sale could fall through! You would be back at square one. Buyers must be pre-qualified for financing and have access to the funds they need for the purchase.

There are red flags that you must not ignore. For example, if the sale is contingent on other things happening, or the acquiring company says they can get financing as long as they meet a certain target. Hearing, “We’ve got it covered no problem,” but you have not been provided documentary proof.

This is why you need sell-side advisory support, where, for example, their attorneys will work with your lawyers and provide documentation proving they are ready to close the deal.

Michelle and Christopher: Failing to understand that seller’s remorse is common

You are selling something you have worked your entire life to create, so it’s only natural. Try to shake it off. Embrace where you are, what you have built and envision a future separate from your life’s accomplishments, which are now moving into the hands of someone who will take them to the next level.

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

If your estate includes private equity investments, operating businesses or intellectual property interests, I’d wager that you have asked about client confidentiality during every introductory meeting with a potential adviser. I believe that almost every wealth adviser, bank officer, broker, portfolio manager and trust officer has responded to your inquiry with the same assurances:

“Our clients’ confidentiality is one of our primary concerns. We do not disclose your information to any third party unless you request it. Our electronic communications are encrypted whenever they include sensitive, financial or confidential information.”

A leap of faith

Of course, these kinds of statements do not answer your question, do they? Perhaps, because what you seek is not an assurance of confidentiality but of confidence in that adviser. I wish it were easy for you to build confidence in your advisers. You must share so much information so quickly to obtain the financial, fiduciary and legal services you need. And it is almost a leap of faith when you engage a new adviser based on trust that they have not had time to earn.

Sometimes, my trust company is hired after a single conversation with the prospective family as the directed trustee for a wealth transfer strategy related to a business transaction involving tens of millions of dollars. Almost invariably, it is an introduction by a trusted adviser that laid the necessary foundation for building that kind of confidence.

If you may soon be selling your share of a successful business or other highly appreciated assets, you must engage a team of experts with confidence in their abilities.

Many moving parts

For example, my trust company often serves as an independent trustee, so clients may obtain certain income and estate tax benefits, asset protection and other advantages through a sale involving a trust. But for any trust strategy to succeed, all the advisers serving a client must understand the many moving parts of these transactions to effectuate and preserve the intended tax and financial benefits. And while doing so, they must each employ established practices to safeguard the client’s confidential information.

The process to establish such a trust in conjunction with a properly executed business transaction will necessarily include dealings with a broad variety of parties: sellers and buyers (and their officers, employees and tax and legal advisers); one or more banks and trust companies, law firms and accounting firms (and their staff and associates); one or more brokerage or financial firms (and their staff and associates); and family members (either in the know or unaware of these activities). That is an abundance of essential and tangential people with access to confidential information at a very sensitive time.

Transactions that involve intellectual property, trade secrets and/or the sale of company stock or assets sometimes require complete secrecy. An inadvertent disclosure to customers, suppliers, distributors or competitors could alter those relationships and undermine established goodwill, confidence in supply and sales agreements, and even the negotiated features of the transaction itself, such as the market valuation and sales price. All the nondisclosure agreements in the world won’t provide effective security if some of these parties lack the requisite expertise to execute a multistep transaction or fail to follow standards and practices controlling disclosure.

Personal involvement is crucial

But how do you ensure that your proposed business transaction and trust strategy will be protected? You must personally involve yourself diligently in the selection process and rely on your instincts. There are certain steps that seem to fall into place all on their own, but only if you let them. Foremost is the selection of your advisers.

Your corporate transactional attorney or your trust and estate attorney is hopefully a long-term adviser. Usually, one of these two advisers will first propose establishing a trust to obtain a greater benefit from the sale of your company or other assets. So first, meet with both these attorneys together so they may explain the division of labor and outline the many steps to implement an irrevocable trust strategy as a component part of your transaction.

Often, but not always, this will be a “foreign trust” — so called because it is established under a state law outside your resident state. But, sometimes, the trust will be established in your own state if your state doesn’t impose an income tax, offers strong directed trust laws, and the strategy merely requires an independent trustee (usually a trust company rather than an individual trustee).

Questions to be asking

You may be able to rely on your trust and estate attorney to have the expertise needed to draft a resident or foreign directed trust and advise on its risks and benefits in relation to a business transaction. But this practice requires a working knowledge of corporate, personal and fiduciary tax law, the trust laws of multiple states, and how to structure business transactions that may require company reorganization and strategic tax elections.

So, don’t be shy about asking how many of these trusts they have established, how many have involved a transaction like yours, and to walk through the risks and benefits of the strategy and the chosen jurisdiction.

Second, ask for a recommendation for the trust company you should use. Choosing a store-front trustee or simply using your bank because they operate a trust company means that the adviser with the most direct and continuing connection to your trust assets — your trustee — may not even understand the terms of the trust instrument, much less have the expertise to preserve its tax savings and other benefits. There is a real difference between trust officers trained to administer a large book of personal trusts and a dedicated fiduciary team with a proven track record as a knowledgeable and effective administrator for complicated irrevocable directed trusts and the related business transactions.

Third, ask the senior adviser at the trust company to introduce you to the team. Their team should include a wealth adviser, trust officer, associate support officer and a portfolio manager, with a bench of analysts focusing on securities, bonds and alternate investments. Each of these experts has a role to play in the success of your trust, even several years after the transaction closes. But you must have confidence in more than their expertise. You also need their loyalty; their dedication to your interests over theirs; their ongoing partnership with your own legal, tax and accounting advisers; their ingenuity and proactivity in identifying opportunities through long-term planning; and their objectivity in assessing the risks and benefits of their proposals.

Finally, you need confidence in their commitment to protecting your confidential financial and personal information so it will never be shared without your permission or used to further anyone’s interests before your own. This last item, confidence in your advisory team, begins with a leap of faith and grows with the relationship.

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Editor’s note: Welcome to “The Retirement Happy Hour,” a lifestyle series that explores how people find happiness in retirement, featuring the personal stories of real retirees. Plus, scientific research that reveals how we can all start living a happier, more meaningful life right now.

If your work offered the most important elements to make you happy in life – a sense of purpose, the flexibility to generally live on your terms, financial security and good health – would you ever want to retire?

That’s the question I came away with after speaking with and learning about small-business owners in their 50s or older, known as encore entrepreneurs.

Take for example, the story of Dawn Fleming, 60, a former attorney turned vacation rental entrepreneur.

Like millions of people, Dawn and her husband were hit hard by the 2008 financial crisis. Three properties they owned went into foreclosure, and they struggled to find work. After two rough years, the couple moved from California to Florida to start over and rebuild their finances. But instead of taking the traditional road to retirement, they threw caution to the wind and purchased an oceanfront home on Isla Mujeres, Mexico, in 2016 and converted it into a micro-hotel called Castillito del Caribe.

Now, Dawn says, they manage various business interests while “living the dream in paradise.”

As people generally live longer, healthier lives, some say the definition of retirement is changing. It might be more accurate, though, to say more people are just rejecting the idea altogether. When I asked about potential business risks impacting their retirement, Dawn said, “We don’t feel at risk as we don’t believe in retirement.”

Rather than work toward a retirement that is all rest without work and responsibilities, many older adults want to leverage their skills and pursue their passions to live their best life. And many are doing that by starting their own businesses.

The prevailing image of entrepreneurs as 20- or 30-somethings leading tech startups is deeply flawed. The reality is that more than 50% of U.S. small businesses are owned by people 55 and older, according to a survey by SCORE, a nonprofit that provides volunteer mentorships to small-business owners.

Still, when considering the potential responsibilities of owning a business — manufacturing products, market research, marketing, the occasional disgruntled customer, etc. — is it worth it as a retirement activity?

Most older entrepreneurs say “yes.” A survey from Guidant Financial found 77% of baby boomer small-business owners said they feel happy.

If the thought of dramatically slowing down with age doesn’t thrill you, then it’s worth understanding why these individuals find joy in being encore entrepreneurs.

More than just money: Flexibility, purpose, engagement and health

A decade spent in the finance industry living a road warrior lifestyle, often traveling 150 days a year, took its toll on Andy LaPointe. But it was a single, fateful morning that finally changed everything. On 9/11, he found himself stranded in Kentucky on a business trip. With flights grounded indefinitely, he had to take a rental car back home to northern Michigan. Over the course of the eight-hour journey, he tried to make sense of not only the tragedy of 9/11, but also of his own life. He decided then to start building a new lifestyle on his own terms.

Soon after, Andy and his wife launched Traverse Bay Farms, a gourmet food company based in Bellaire, Michigan, that primarily uses locally sourced produce. Now age 50, he is joining the encore entrepreneur crowd, and says entrepreneurship gives him the life he wanted.

“The most rewarding part is the ability to design the lifestyle I want and then work to earn an income to support that lifestyle,” he says.

LaPointe is not alone. People of all ages want to live life on their terms, to do something meaningful while being able to spend time with loved ones and pursue other interests. That takes a certain level of flexibility not often granted in a typical 9-to-5 job and a level of engagement, perhaps, not often found in a typical retirement.

“For me, the flexibility to schedule my days as I see fit is a big benefit of having my own business,” says Moira Gehring, who at the age of 65 recently launched BoodleBody, a CBD-infused skincare line in Santa Fe, New Mexico.

She says being an entrepreneur, while busy, provides other benefits, too. Her business helps her stay active and socializing with other people, whether at a local market or at meetings with other business owners. On top of that, owning a business has kept her learning new things, such as using social media and e-commerce platforms.

Studies show that socializing and learning are key for improving physical and mental well-being among older adults.

For hotelier Dawn Fleming and her husband, living and owning a business abroad has given them the opportunity to connect and help other expatriates. Dawn says what they enjoy most about their business is “helping people and creating a community.”

In the 2021 report “The Four Pillars of the New Retirement” by Edward Jones and New Age, retirees identified the important elements of well-being as health, positive relationships and close social connections, a sense of purpose, and financial security.

In addition to feeling happy, nearly 80% of boomer small-business owners said their business was currently profitable, according to the Guidant Financial survey. Therefore, I don’t think it’s a stretch to say owning a small business is one of the few activities that could possibly serve all four pillars of retirement.

Starting your own encore business

Should you consider becoming an encore entrepreneur? To find out, ask a few questions, and answer them honestly.

• Do you have a passion or hobby that you want to pursue in retirement? Do you have the financial resources that you can afford to put toward it?
• Do you lack the financial resources to retire and may need to work?
• Does the thought of a traditional retirement bore you? Do you still seek the gratification and challenges that come along with working?

If you answered yes to any of these questions, starting a business may suit you. In that case, here is some advice to help get you started.

Come up with an idea.

You may want to start with what you know and enjoy. Dawn recommends that you try “matching your skills with your passions, because if you don’t love it, you probably won’t be successful.” This is where older adults can utilize their lifetime of experience, knowledge and networks.

Norman Sherman, a business mentor at SCORE, says, “It’s been my experience that 50+ entrepreneurs are more likely to succeed if their business idea is in an area closely related to their body of experience. The learning curve is shortened, and ‘muscle memory’ enables them to avoid common pitfalls.”

Sometimes, however, great business ideas can come from unexpected places. Moira researched the benefits of CBD (cannabinoid) after seeing its healing effects on her rescue dog, who struggled with injuries after being hit by a car. She then started experimenting with her own applications for humans in her kitchen.

Test your business idea.

Moira highly recommends that you “test your idea before committing too much time and capital.”

How?

“Start by speaking with people you know,” says SCORE mentor Norman. “What product or service are they currently using in your competitive frame? Are they satisfied with it? What do they like or dislike? Then share your idea. Do people like or dislike it? Why? What would make it better?” From there, he suggests conducting some market research with programs like SurveyMonkey, which allows you to survey people for little or no cost.

Don’t risk your retirement money.

One challenge particular to encore entrepreneurs is they have less of a cushion for failure. Whereas younger entrepreneurs have the time to start all over, older business owners may find it harder to bounce right back up.

Keep in mind only half of small businesses make it five years, according to the Small Business Association. That means you should avoid risking your most important financial assets, such as your retirement savings. Christopher Giambrone, certified financial planner and co-founder of CG Capital, advises aspiring encore entrepreneurs to remember “retirement savings should be used for that purpose: retirement.”

Manage your business as efficiently as possible.

In addition to not letting a business consume your finances, you also want to avoid letting it consume your time. That means working smarter, not harder.

“I focus more on how my business is ran and not working for a specific number of hours per day,” says Andy of Traverse Bay Farms. “I am focused on always working on my business and not in my business.”

Prepare for the unexpected.

No matter how good your business plan, you cannot eliminate all risk. Andy says the biggest risk in business is a “black swan event,” which is an unpredictable event that has major consequences, such as the COVID-19 pandemic. These can cause even successful businesses to go under.

“The best way to offset a potential business failure is to diversify into additional other sources of income,” he says. For him, he has translated his experience into books on entrepreneurship and personal finance that provide an additional stream of income outside of the food business.

Dawn agrees. She says, “You must make good decisions that put you in position to weather the storms.” After being asked repeatedly for tips on how to retire overseas, she launched a podcast called Overseas Life Redesign, and a coaching company of the same name, as well as wrote the book Claim Your Dream Life about retiring abroad.

Get help.

First-time business owners don’t have to get started on their own. Moira received a mentorship for her skincare business through the SCORE program and suggests people to “take advantage of all the business programs you can find locally or online.”

These programs can help you with the basics but also new demands of operating a business today. For example, Norman says, “The challenge for people 50+ is that digital marketing is critical to most early-stage businesses, and people in that age group are simply not as digitally savvy as their younger counterparts.”

Despite the fact starting a business is more challenging than, say, reserving a tee time, it can provide many things money can’t. As President Franklin Roosevelt said, “Happiness is not in the mere possession of money; it lies in the joy of achievement, in the thrill of creative effort.”

Ultimately, entrepreneurship can provide a sense of purpose, which many people recognize as a source of happiness. As Dawn puts it, “Even those I work with who are set financially for retirement understand the need for purpose.”

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

“Mr. Beaver, I am being sued in small claims court by several investors in my revolutionary Food Truck App that enables you to know when a food truck is in your area,” a flustered “Colin” explained during our phone call.

“No one else has anything like this. I told several friends about it and my need to finance development and sale of the app to food truck owners. So, they each gave me $2,500. I began work on the project, got behind, was unable to finish it and the money is gone. They all want their investment returned. What should I do?”

Does this sound at all familiar? Has a friend approached you with a similar request?

I asked Colin if he had set up a corporation, an LLC or partnership. Did he have any formal business structure at all? Were there any written agreements specifying what these investors would be receiving?

His answers were “no” to each question. “I didn’t think about that stuff. I just quit my job with an IT company and used their money to develop the app and live off of.” He admitted to never seeking legal advice before asking for money.

How to Get Yourself in Trouble Looking for Investors

To Bakersfield, California, attorney Chris Hamilton, whose law practice concentrates on transactions and business formation, “Colin’s situation is not unique. Stories of millionaires who got their start working in a garage have led to a belief that success in the world of technology does not depend on prudent business practices. Unfortunately, that is not the case.

“Dennis, no matter how great your idea, the worst thing you can do is to start accepting money from investors – especially family or friends — without first clearly outlining the nature of the investment and the potential risks. You must seriously consider the damage a failed investment will do to friendships and family relations.”

With that theme as a background, Hamilton offers these time-tested methods of getting yourself into hot water.

1. Failing to do your own due diligence regarding your proposed busines

Consequences: If you do not understand the market you are entering, your idea may be destined to fail. Also, some investors may claim you misrepresented the quality or nature of the investment. Before you seek investors, you should know:

(A) Who is my competition?

(B) What is my business advantage, and is my business idea really viable?

2. Failing to consider the appropriate format for your business

Consequences: This can result in personal liability from your business, an unnecessarily complicated management structure, inability to attract investors, or a tax disadvantage. You absolutely must be able to answer these questions:

(A) Should I incorporate, form an LLC or some sort of partnership?

(B) Who are my proposed investors?

(C) Will my business make money through the sale of goods or by offering services?

3. Failing to vet your potential investors and establish clear terms of investment

Consequences: You may end up taking money from an investor who cannot afford the amount or type of investment you need. Further, you may end up with co-owners when you only sought a loan; or, alternately, a loan that must be repaid before you are able to repay it. Ask yourself:

(A) Is an equity investment — for example, selling shares — preferred to a loan for the business?

(B) Do I have enough verified financial information about potential investors to satisfy state and federal securities laws?

(C) Have I clearly identified in writing the terms of the proposed investment that acknowledge the risks and establish expectations?

4. Failing to consider how much money your business needs

Consequences: You may doom yourself and your investors to the loss of their investment. It is critical to:

(A) Prepare a realistic proposed budget that forecasts initial and future capital as well as operational costs to give the business the best chance of success.

(B) Give yourself a buffer for unexpected costs.

5. Failing to obtain legal advice regarding your proposed business before you begin soliciting investments

Items 2-4 are best addressed with the assistance of counsel. An experienced business attorney should:

(A) Discuss and formalize your investment needs.

(B) Help you establish appropriate documents to gather necessary investor information; establish investor expectations; clearly define investor rights and obligations.

(C) Advise whether your proposed fundraising will require state or federal registration or is exempt from such registration and assist with appropriate filings.

Concluding our interview, Hamilton points out, “Colin clearly failed numbers 1, 3 and 4 above. He claimed his idea was original, but it was stale, as food truck apps have been around since 2009! He did not establish the terms of the investment, investor expectations nor did he raise enough capital to succeed.”

My advice to Colin was simple; “Pay these people back their money and hope that no one goes to the police.”

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

I’m an entrepreneur and just so happen to be in the business of providing other entrepreneurs with financial advice. But I don’t typically offer up the usual status quo advice that tells you to do things that aren’t always in alignment with growing your business.

My views originate from my experiences and at times are contrarian to what’s being recommended by the usual tax preparer and other financial advisers, because I am in the trenches running a business just like you. I know what it takes to grow a business, make payroll, deal with IRS notices and manage cash flow.

The truth is that being an entrepreneur can be isolating at times as a result of being wrapped up in the day-to-day of running your business. When you are hyper-focused on your business, it is difficult to also be an expert at managing the profits of the company. You may be great at making money, but once it’s made, what do you do with it?

Thinking differently about your company and how you will use it to build wealth is the key to true financial success.

In this article, I’ll outline five ways you can shift your mindset about money to transform how you define and operate your business and approach your financial decisions. It will help you identify what you really want to achieve: A Self-Managing Company®, a term coined by Dan Sullivan of Strategic Coach.

Mind Shift No. 1: Understand that Retirement Savings Plans Don’t ‘Lower’ Your Tax Bill

As a business owner, you are probably time-starved and used to making fast decisions. And you may be tempted to make fast decisions at tax time, especially when your tax preparer suggests that tax-deferred investments are the answer to lower your tax bill and save some money for retirement. Easy enough, right?

This is what I like to call a half-truth. It’s true that you’ll get the deduction for that year’s taxes. But the other half of the story uncovers the problem with the use of SEP IRAs, 401(k)s and other tax-deferred options to “lower” your tax bill. The reality is that you are taking money from your business where you have some level of control and redirecting those dollars into the stock market where you have absolutely no control. The money is tied up until you are 59½ years old and face potentially higher tax liabilities than you previously owed with no access to your cash if it is needed for growing or sustaining your business.

When you own a business, the half-truths you hear from many finance professionals and the mainstream media can at times negatively impact your ability to grow your business and protect your interests. I have found there are other, more productive ways to build wealth outside of your business, beyond the base-level concepts of investing or putting money in an IRA or 401(k).

Mind Shift No. 2: View Your Company Not as Your Job, but as a Tool for Building Your Wealth

If you run a healthy business, you have a long-term strategy. You know what the end-goal is. You think about the business as a whole, rather than focusing on simply the day-to-day tasks.

We’ve all heard the old adage: Work on your business, not in your business. That’s because if you’re working in your business all the time, you’ve only created a job for yourself. The goal is to build systems and develop people to slowly work yourself out of the role you have and allow the business to run on its own. The sooner you shift your mindset to this way of thinking, the sooner you can begin to experience the results.

First, carve out the time in your day to think about your business. Many business owners I talk to don’t do this, because they are buried in the work. Take time to talk to your future self about what you want your life to look like in the future. What would your future self say to you about the decisions and choices you are making? It helps to outline your thinking time, keep a journal of your discoveries, meditate to de-stress, and use the time to reflect on what you are trying to accomplish in the business.

Next, think about your business as a piece of your financial plan. How much time and capital are you investing into the business, and what are you getting out of it? What is your ROI? I’ve found that a business can offer the biggest opportunity to build wealth, and in many cases — depending on your results — it can offer more than what you might get from investing in the market.

Finally, think with the end in mind. At the end of the day, what are you trying to get out of your company? To build wealth through your business, you must identify what will build its value.

Building value revolves around creating a self-managing company, one that runs without you and has a strategy to sustain itself into the future. This allows you to sell it for maximum value, or even create a passive income stream without actually having to work in the business.

Shifting your mindset is important, because you probably didn’t start your business that way. Many business owners don’t, and that’s OK while you’re getting things up and running. But it’s important to remember that what got you started will not get you to the next level and will not build the wealth needed to successfully exit the business.

Mind Shift No. 3: Master Your Cash Flow

I tend to bust a lot of myths when it comes to financial matters, and one of them has to do with cash flow. This is especially important to understand as an entrepreneur. Your cash flow is not there to simply pay your bills. Yes, you must pay your bills of course, but there is more to it than simply making payroll.

Cash flow is a tool to help you build wealth and the value of your company. Healthy cash flow allows for you to control your money, and there are strategies you can explore to help you maximize it.

I recently spoke with a partner of a business who was earning a W-2 salary of $400,000 per year. In working with his CPA, we were able to rework his partnership agreement, removing him as an employee and adding him as a consultant of his own LLC. While this simple strategy reduced his tax liability by $20,000, implementing this strategy was about more than just lowering taxes. This was about cash flow – everything is always about cash flow. By making this little tweak, he increased his cash flow by $1,666 per month.

I’m not a CPA and don’t provide tax advice, but I ask a lot of questions and propose many scenarios for the tax professionals to consider – scenarios that can increase cash flow for business owners. Increasing and optimizing your cash flow should be a top priority for your business.

Mind Shift No. 4: Be Your Own Bank

Companies with cash are able to do many things without having to rely on a bank or other source of funding. In essence, they can be their own bank. Think about it. When you have cash, you can use it to work on your wealth-building strategy. You could buy a company, invest in equipment, hire more people (maybe even a replacement for yourself who can run the company while you collect passive income), buy property, or take advantage of any other opportunity that may come your way.

But there is another way you can be your own bank. Maybe you’ve heard of the concept of “BUILD Banking™,” a cash flow strategy using a specially designed life insurance contract. It’s a strategy that I use personally and with many of my clients who want to have greater control of their cash flow. It frees them from dependence on banks for capital infusions and avoids government red tape when they need to access their money.

For more information about BUILD Banking™, visit www.buildbanking.com.

This strategy enables business owners to grow assets tax-free and have access to those funds whenever they’re needed. In essence, you’re accessing cash when it is needed while having uninterrupted compounding growth for your future.

Mind Shift No. 5: Understand Your Legal Exposures and Protect Yourself

You likely have some form, or forms, of insurance in place for your business. And you may believe that these policies have you covered. Well, they may, and they may not. The coverage you need goes far beyond liability, even extending into punitive damages.

It’s important to work with an insurance professional who specializes in business coverage to ensure that you have the right type of policies and the proper level of protection for your specific business.

There are also certain types of insurance policies (including the BUILD Banking strategy I’ve described above) that can serve a strategic purpose for your business. It’s common, and valuable, for business owners to have a life insurance contract as part of their succession plan, acting as a funding mechanism for the beneficiary to purchase the deceased owner’s share of the business.

Again, you will want to have a collaborating team of insurance professionals who have expertise in their vertical and who understand your business, your goals and what you are trying to accomplish. It’s also a good idea to include your CPA, attorney and financial planner in on those discussions.

These five financial planning tips and mindset shifts will help you use your business as a tool to start building wealth (or build greater wealth). They may be things you’ve never thought about, or things you’ve considered but haven’t been able to implement. Putting these ideas to work can get you on the path to true business success.

Results may vary. Any descriptions involving life insurance policies and their use as an alternative form of financing or risk management techniques are provided for illustration purposes only, will not apply in all situations, may not be fully indicative of any present or future investments, and may be changed at the discretion of the insurance carrier, General Partner and/or Manager and are not intended to reflect guarantees on securities performance. Benefits and guarantees are based on the claims paying ability of the insurance company.

The terms BUILD Banking™, private banking alternatives or specially designed life insurance contracts (SDLIC) are not meant to insinuate that the issuer is creating a real bank for its clients or communicating that life insurance companies are the same as traditional banking institutions.

This material is educational in nature and should not be deemed as a solicitation of any specific product or service. BUILD Banking™ is offered by Skrobonja Insurance Services LLC only and is not offered by Kalos Capital Inc. nor Kalos Management.

BUILD Banking™ is a DBA of Skrobonja Insurance Services LLC. Skrobonja Insurance Services LLC does not provide tax or legal advice. The opinions and views expressed here are for informational purposes only. Please consult with your tax and/or legal adviser for such guidance.

Securities offered only by duly registered individuals through Madison Avenue Securities, LLC. (MAS), Member FINRA & SIPC. Advisory services offered only by duly registered individuals through AE Wealth Management (“AEWM”), a registered investment adviser. Skrobonja Financial Group, LLC, Skrobonja Insurance Services, LLC, AEWM and MAS are not affiliated entities. The article and opinions in this publication are for general information only and are not intended to provide specific advice or recommendations for any individual. We suggest that you consult your accountant, tax or legal adviser with regard to your individual situation.

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

“Mr. Beaver, suffering from bad arthritis in my hands and nighttime leg cramps — charley horses — led me to inventing a battery-operated lime squeezer that I would like to market.

“I was turned on to drinking tonic water, which contains quinine that reduces nighttime leg cramps. I enjoy fresh lime juice in my tonic water, but with very bad arthritis, it is painful to manually squeeze limes, and so I developed this nifty device.

“Several months ago I saw an ad on late-night television from a company wanting to help inventors get their products patented and marketed. I called and wound up sending them several hundred dollars for a free evaluation, preliminary patent research and a marketability study. They have been very encouraging, and now want $5,000 more. My wife says I am being scammed. What do you recommend?” — “Taylor”

Invention-Promotion Firms Just Want Your Money

While Taylor did not give me the name of the company, what he described fit what Bakersfield patent attorney James Duncan describes as “a highly refined scam that appeals to people who have an idea for an invention they desperately want to see realized.”

And, just as my reader described, “After seeing their ad, you phone, they send you a form to fill out giving a brief description of your invention, and within days they call you back, saying ‘This is great! We can get it patented and marketed for you, and to begin, just send us $700 for a professional evaluation.’"

“This is Round 1 of how you are about to be scammed,” Duncan observes.

“Soon, you get an official-looking, bound volume with marketing data — all canned stuff — the statistics how your area is growing, and they set you up to think that you will capture this fast-growing market.

“They will say, ‘If you want to go the next step, we can do a provisional patent application, show up at trade fairs and make lots of money for you, and all this requires is signing our agreement.’

“The bell is about to ring for Round 2.”

$10,000 for our Expanded Service

So, if you are the inventor, what are you thinking at this stage?

“For lots of people, this is the best news they have had in years and eagerly sign the contract without reading it carefully and not paying attention to the venue clause — stating where any disputes are to be handled. This is Round 2, and the price tag frequently goes up to $10,000,” Duncan notes, adding:

“I have seen people who fell for this, were out over $20,000 and had nothing to show for it. They were assured of making huge sums of money, and told, ‘This modest investment will pay off big time.’ But it is just one empty promise after another, such as, ‘We’ve found firms who will market your product,’ but nothing concrete ever develops.

“Finally, the client, who lives in Montana, realizes they’ve been scammed and asks a lawyer, ‘What can I do about this?’ But the contract specifies venue in Florida!”

Stunning Realities – Scammers Everywhere

Before spending 10 cents with any invention-promotion company, spend 10 minutes and Google “Scam prevention USPTO (United States Patent and Trademark Office).” Additionally, Google “FTC Invention Promotion Scams.” You will find one horror story after another, millions of dollars stolen and enough heartbreak for a Netflix documentary.

You will read about a repeat group of scammers who get prosecuted and, like zombies, return from the grave, changing company names, operating boiler rooms with banks of operators who answer calls to their “800” phone number.

“Hardly anyone who becomes a ‘client’ of these promotion companies makes money. The ones who make the money are the crooks who run these scam operations,” Duncan says, shaking his head in anger.

“Dennis, it is so sad. They prey on the uneducated who watch late-night TV. Many have lost a job and are in a poor position to lose money but send $700, receive this glowing report suggesting they will be wealthy, and are talked into putting 10 grand on a credit card. At the end of the day they have nothing and are in deep financial trouble, strung along by hope.”

Hard Truths from a Patent Attorney

“Before spending any money — even on a patent lawyer — use free resources offered by the Better Business Bureau, Federal Trade Commission (FTC) and the United States Patent and Trademark Office. In addition, Small Business Development Centers across the country put on workshops with other inventors who can provide guidance at no charge.”

Duncan concluded our interview by suggesting, “If a family member is about to dial that ‘800’ number, have them first read the FTC’s ‘Invention Promotion Firms’ report.”

To which I add, “And then hide their phone!”

Dennis Beaver Practices law in Bakersfield and welcomes comments and questions from readers, which may be faxed to 661-323-7993 or e-mailed to Lagombeaver1@gmail.com. And be sure to visit dennisbeaver.com.

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

For many retirees, the next chapter of life isn’t about slowing down — it’s about finally launching the business venture they’ve spent a career dreaming about. However, transitioning from a solo career to a collaborative partnership requires more than just a shared vision and mutual respect. While a partnership can provide the capital and complementary skills needed to succeed, it also introduces a layer of complexity that can jeopardize both the business and your personal finances if not handled correctly.

Before diving into a new venture, it is essential to establish a clear framework for how the partnership will operate. From deciding on a legal structure and financing to determining who has the final say in a stalemate, the most successful partnerships are built on a foundation of transparency and clarity about roles and expectations at the outset.

By addressing potential conflicts — such as unequal contributions, health issues, or differing retirement timelines — before they arise, you can protect your investment and ensure your post-career business is a source of fulfillment rather than stress.

How to resolve an impasse is just one of many decisions you’ll want to agree on before establishing a business partnership. You should also discuss financing, business structure and location, other contributors, insurance and tax implications, valuing the company, and the possibility that one partner might want to step away from the business in the future.

“It’s easier to get married than to get divorced,” says David Levi, senior managing director for CBIZ, a national professional services advisor. “Spelling stuff out upfront is just huge.”

That said, it’s impossible to predict everything that might come up, and hard to envision the scope and future of the business when you’re just at the starting gate. Although you will want to touch on all the key issues, don’t lock yourself into rigid policies or negotiate so fiercely that you kill a promising business venture before it launches. It’s a shame when people “try to negotiate too sharp a deal or too comprehensive a deal. There needs to be some trust and ambiguity,” says John Emory Jr., president of Emory & Co., a business valuation and investment banking firm in Milwaukee, Wisconsin.

Plan for the Unexpected

Before launching a partnership, talk through your vision of the business, risk tolerance, timeline and what may need to evolve as the business grows. “It’s good to be aligned,” Emory says. “When they bring in someone like me, it’s often because one person wants to retire in the next couple of years and the other wants to work for another 10 years.”

Conflicts often arise from feelings of unequal contribution and defensiveness about underperformance, says Ray Parsons, 59, chief executive of Transcepta, a procurement and accounts payable platform that he co-founded with three partners. “Feelings of unequal contribution are perhaps the toughest problem to face because they involve a lot of ego for all parties,” Parsons says.

That’s one reason partners should understand and mentally prepare for the division of labor and goals to shift over time. “These are living, breathing documents,” says Levi, who advises partners to have an open discussion as things change and restructure compensation if needed. He’s seen situations where one operating partner does most of the work, but there’s no mechanism for buying the other partner out.

For example, if one partner has a health or personal issue that requires stepping back from the business for a year, the other partner should be compensated for pulling the extra load temporarily. “For that period while that difference exists, it’s got to be acknowledged,” Levi says.

Similarly, if one partner is much older and aims to retire sooner, the priority should be steering existing clients toward the younger partner to smooth the transition instead of drumming up new business

Raising Capital

Entrepreneurs often underestimate the capital needed for success, experts say. About 20% of new businesses fail during the first two years. Partners should agree on sources of financing and strategies for raising money in the future.

“I would really discourage going to the retirement funds, especially pre-age 59½ because you have a 10% penalty for premature distributions,” Levi says. “What people most often do is pound credit cards, because it’s the easiest thing to do, or home equity lines.”

Decide from now how you’ll finance the business. Do you both need to agree on taking out a business loan over a certain amount? If one partner has more liquid personal assets, is that person willing to lend to the business, and if so, on what terms would the loan be repaid?

“If you have banking or investment relationships, talk to those bankers about getting financing for the business,” Levi suggests. For businesses with substantial physical assets, a good option might be lease financing, in which a lender owns the assets but the partnership buys the rights to use them through ongoing lease payments. Or if your customers owe the business a large amount, you could sell those future accounts receivable to a factoring company that advances you a smaller amount of money now. “It’s kind of like a revolving credit line,” he says.

Business 101

Of course, partners must also agree on the foundation of the business. Discuss questions like: Where should you incorporate and be headquartered? What business structure is best? How much insurance should we buy?

“Errors and omission insurance, liability, and property and casualty insurance are a must. Sometimes key person life insurance is important,” to account for the death or disability of one of the partners, Levi says. Many startups, though, may not be able to afford all these policies initially, so check your personal umbrella policy to see if it covers errors and omissions in your business. Make a plan to acquire coverage in the future if you don’t have the budget now.

Investigate the differences among an LLC, S corporation and C corporation to decide which structure is best for you. An LLC generally offers the most flexibility, but profits are subject to self-employment tax (both sides of Medicare and Social Security taxes) if you also manage the company. If you anticipate reinvesting a significant amount of profits in the business, an S-corp provides the option of putting owners on a reasonable salary, so that profit isn’t subject to payroll taxes.

A C-corp functions as its own taxpayer. That means the owners don’t have to file tax returns in each state where the business operates, and the corporation may enjoy a lower tax rate. A C-corp, however, has the potential for double taxation when you do want to take out profits. Ask legal and tax experts which is best for your situation. “Don’t skimp on your organizing documents and don’t skimp on advice,” Levi says.

Another potentially thorny area is whether to allow the partners’ children to work in the business, which could have the unintended consequences of tilting the company’s center of gravity toward the partner with more kids. You don’t want to accidentally become a family business.

And don’t forget to discuss whether the business will offer a retirement plan. Although each partner may have different needs for sheltering income from tax, the business must treat both partners the same.

The Buck Stops Here

All the planning in the world won’t prevent conflict, so decide early on how you will handle disagreements and avoid stalemates. Will one partner ultimately get the final say? “Many lawyers advise their clients never to enter a 50-50 partnership” because of a deadlock if the two partners disagree, Emory says. Nevertheless, “I’ve seen lots of 50-50 companies work very well.”

You might decide that one equal partner always breaks the tie. Or perhaps you divide up areas of expertise so that each person has the final say in their wheelhouse, with any major financial decisions made together.

In a service business, some partnerships are structured more like an office share, where expenses are shared equally but profits are divided based on the business each person brings in and manages. “If I’m billing 40 hours a week and you’re billing 20 hours a week, we’re going to contribute to the common expenses, but at the end of the day I don’t expect to support your lack of productivity,” Levi says.

Often, it helps to separate whether an idea is a good one from how resources will be allocated to make it happen. Parsons discovered this when his company’s operations and engineering leaders were split on whether to provide more automation for a possible new line of service. “It became clear that each was really concerned with the impact on their already fully committed teams,” he recalls. Once each leader acknowledged that the initiative would be good for the company, they could then address the division of labor. In the end, both divisions chipped in, and the company added resources to fill the gap.

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One of the most important assets a business may have is rarely reflected in its yearly statement.

“The value of easy access to seasoned financial experts who understand your industry and who have the resources to help you reach your goals may be hard to quantify, but it is impossible to overstate,” says Michele Martin, President of Lurie Wealth Advisors.

Lurie Wealth Advisors is a sister company of the accounting firm Lurie LLP, a large regional firm with locations in Minnesota and Florida that focuses exclusively on the needs of high-net-worth families and the businesses they own. Lurie, LLP was founded 80 years ago and continuously led by six generations of partners. Lurie Wealth Advisors was named as one of Accounting Today’s Top 150 Wealth Management Firms by Assets Under Management in 2019.

In response to the needs of Lurie LLP’s clients, Lurie Wealth Advisors was formed in 2015. Housed in the Lurie headquarters, it builds on the parent company’s experience with high-net-worth entrepreneurs. To lead the wealth management team, Lurie tapped Martin who has worked for the firm since 2014 and who has 30 years of experience in private banking, trusts, investments, and commercial banking.

A Holistic Approach to Wealth Management

“For entrepreneurs, the line between business and personal interests is blurry, so close, personal and long-term relationships are critical,” says Brian Thorkelson CIO of Lurie Wealth Advisors. “We dedicate a lot of time getting to know clients and their families.”

Lurie Wealth Advisors’ clients are highly successful, well-educated men and women who often own a business. Many are contemplating a transition such as buying or selling a business, retirement, and divorce or proactive planning to mitigate personal and business-related risks.

“Every decision has a ripple effect, impacting profitability, lifestyle, tax liability, and legacy plans, so we act as quarterbacks. We balance the many variables, orchestrate a strategy and coordinate a client’s entire financial team – investments, legal, accounting, tax, and insurance,” explains Martin. “As fiduciaries, our role is to provide effective, absolutely unbiased decision support.”

An exclusive commitment to the best interest of clients also informs Lurie Wealth Advisors’ investment management services. “We are independent, so we have the freedom to consider the entire investment universe,” says Thorkelson. “Our original portfolios are well researched by our own team. We will not expose a client to unnecessary risk or just plug someone into a model portfolio.”

Cash Flow Studies Help Future-proof Businesses and Retirement

An essential tool in Lurie Wealth Advisors’ approach is the cash flow process. “Until someone invents the crystal ball, cash flow studies are the next best thing when planning the future,” says Martin. “We have direct access to Lurie’s experienced CPAs and professionals, who are located across the hall and can work with us to run the different scenarios. The information generated creates confidence, and even better, provides the guidelines for making proactive adjustments along the way.”

Cash flow studies are particularly important to retirement plans. “Even very large nest eggs can be depleted early unless you follow a disciplined withdrawal plan. By projecting cash flows, you will know how foreseeable events, such as the sale of a house, the death of a spouse, major purchases and other events will affect your retirement income or philanthropic goals,” says Thorkelson.

“Financial strategies change rapidly when someone moves from the accumulation phase to the distribution phase. It’s a whole new ballgame. It’s particularly satisfying to us when clients who have worked and saved diligently all of their lives, trust us to handle their assets during their retirement years,” concludes Martin. “We work hard everyday to earn their trust and serve their family in the decades ahead.”

Navigating Uncertain Times

“This time is different.” As the saying goes, these are the four most dangerous words for an investor. And yet every time is different. Michele and Brian have spent the past 30 years giving financial advice and this is now the fifth bear market they have navigated with clients. While the catalyst was never the same, each time presented similar themes and investment behaviors.

The most important similarity is there has always been a full recovery for broadly diversified portfolios. While none of us have lived through a pandemic this significant, we do have some historical examples to draw from. Lurie Wealth Advisors is here to help our clients through this period of uncertainty. We do the work together with our clients to position portfolios appropriately, take advantage of opportunities as they come along, and to plan for their future.

Working as one to deliver independent, objective advice

luriewealthadvisors.com | 612.381.8750

2501 Wayzata Boulevard | Minneapolis, MN 55405

LWA@luriewealthadvisors.com

Securities offered through DAI Securities, LLC, member FINRA/SIPC. Advisory Services offered through AdvisorNet Wealth Management. Lurie Wealth Advisors, DAI Securities LLC, and AdvisorNet Wealth Management are separate and unaffiliated entities.

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