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So if you take the lump sum

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payout and you receive the full

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amount of your business all at

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once, this could raise your

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income enough where you are

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susceptible to all of these

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additional taxes that you've

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never had to face.

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In order to minimize taxes on

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the sale of your business, you want

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to think about what your current

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tax bracket and tax situation looks

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like as well as in the future.

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Depending on how that looks,

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you may want to structure the sale

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as an, an installment sale

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where it takes place over time.

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It's more of a gradual

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transition of, of the purchase

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and the business.

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So this would mean that you would

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receive the proceeds over time

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gradually, as opposed to a lump

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sum payout where you're receiving

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the full amount all at once.

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When you sell your business,

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you are most likely going

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to be encountering capital

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gains taxes, which is a tax

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on the amount that the value

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of your business has grown.

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So you're going to need to know

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what the cost basis is, so what

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the initial value of your

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business when you purchased it,

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plus any major improvements

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you've made, and then what are we

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selling it for?

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What is my tax bracket?

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So what is the tax rate that

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I'm going to be paying

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on these capital gains taxes?

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The federal rate is the maximum

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capital gains rate is 20%.

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And here in Massachusetts,

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the capital gains tax rate is 5%.

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So you may be looking at 25% of

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that sales price being taken away

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in simply capital gains taxes.

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And also, depending on which

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state you are in, that

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capital gains rate for the state

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tax is going to differ.

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In states like California, it's

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upwards of 14%, whereas

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other states it could be zero.

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So that's going to have a large

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impact on the net amount that

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you actually receive in your

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pocket at the end of the day.

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Just important to take a step

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back and think about what does

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my situation look like, what

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taxes might I be faced with?

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There's also additional, what

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we call trigger taxes that

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could come into play, such as

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increases to your Medicare

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premiums in the future or

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net investment income tax.

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Some of these come up when your

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income reaches a certain level.

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I'm always going to come back

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to having a financial plan in

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place prior to that transition

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that allows you to take into

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account all of the other pieces

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of your financial puzzle.

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Ideally, your business does not

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make up your entire net worth.

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It likely makes up a large

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portion of it, however, so we

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want to take into account again

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what you're going to receive

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from the business, and that

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means after taxes, after fees

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and expenses as well.

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As any other retirement accounts or

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retirement savings for you and

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your spouse if you if you have

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one, as well as things like Social

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Security, pension income and any

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potential sources of income,

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whether that is continuing part

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time or having a consulting gig,

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either through your business or

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somewhere else.

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So putting all of that together

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into one financial plan will show

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you how you can turn that lump sum

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into your retirement paycheck.

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The amount of that retirement

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paycheck is going to depend

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on, again, all of those elements

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in the financial

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plan and your particular situation.

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We like to call that your retirement

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paycheck replacement plan.