As a business owner, you’ve put in years of hard work to build something meaningful. But at some point, you’ll need to step away—whether that means selling your business, passing it down, or simply winding things down. The question is: how do you ensure a smooth transition while also setting yourself up for a financially secure retirement?

Many business owners assume their company will fund their retirement, but without a solid exit strategy and a well-structured retirement plan, things may not go as expected. At Mirus Financial Partners, we help business owners create a plan that not only maximizes the value of their business but also can help ensure that they have the personal financial security they deserve.

Preparing Your Business for Sale

If selling your business is part of your retirement plan, maximizing its value ahead of time is crucial. A well-prepared business attracts more buyers, sells for a higher price, and makes for a smoother transition.

The first step is getting your financials in order. Buyers want to see strong revenue, consistent profitability, and well-documented records. Keeping clear financial statements, contracts, and operational processes makes your business more appealing and easier to sell.

Another key factor is making sure your business isn’t overly dependent on you. If everything runs through you, it can be a red flag for buyers. A strong management team and well-documented processes ensure that the business can continue thriving without you.

Understanding business valuation is also important. A company’s value is often based on factors like revenue, EBITDA (earnings before interest, taxes, depreciation, and amortization), industry trends, and customer retention. Working with a valuation professional can give you a clearer picture of what your business is worth and what steps you can take to increase its value.

Lastly, don’t overlook taxes. How your business is structured—whether it’s a sole proprietorship, partnership, S-Corp, or C-Corp—affects how much you’ll owe in taxes when you sell. Working with a financial and tax professional can help you develop a strategy to keep more of the proceeds in your pocket.

Planning for Succession

If you’re not planning to sell to an outside buyer, a succession plan ensures a smooth transition, whether you’re passing the business to a family member, a business partner, or employees.

A good succession plan clearly defines who will take over, how ownership and responsibilities will be transferred, and what financial arrangements need to be made. If family members are involved, open discussions about expectations, roles, and financial agreements can prevent conflicts down the road.

For businesses with multiple owners, having a buy-sell agreement is essential. This legal agreement lays out what happens if an owner retires, becomes incapacitated, or passes away. It often includes funding mechanisms, such as life insurance policies, to facilitate the transition.

If you’re considering passing the business to employees, an Employee Stock Ownership Plan (ESOP) could be a great option. ESOPs allow employees to gradually take ownership while giving you a structured exit strategy.

Regardless of your plan, it’s best to start the transition early. Training successors and gradually shifting responsibilities helps ensure a smooth handoff and preserves the value of your business.

Building Your Retirement Savings

Even if your business is a significant asset, it’s smart to diversify your retirement savings so you’re not relying solely on its sale or succession. Fortunately, business owners have access to several tax-advantaged retirement accounts that can help build long-term financial security.

A SEP IRA (Simplified Employee Pension) is a simple, tax-efficient option for business owners. It allows for high contribution limits and tax-deductible contributions while requiring minimal administration.

A Solo 401(k) is ideal if you don’t have employees (other than a spouse). It allows for both employer and employee contributions, meaning you can save more than with a traditional 401(k).

A Profit-Sharing Plan lets you contribute a percentage of company profits to employee retirement accounts, including your own. This flexible plan allows you to adjust contributions based on business performance while also offering a valuable employee benefit.

Beyond traditional retirement accounts, consider diversifying with taxable brokerage accounts, real estate investments, or annuities to create additional income streams in retirement.

Managing Taxes in Retirement

Taxes play a huge role in retirement planning, especially for business owners who may have multiple sources of income. The sale of a business, retirement account withdrawals, Social Security benefits, and investment income all have tax implications.

Having a well-thought-out withdrawal strategy can help minimize taxes. For example, spreading out the sale of your business over time through installment payments could reduce your tax liability. Additionally, maintaining a mix of tax-deferred, tax-free, and taxable accounts allows for better control over how much you owe in retirement.

Consulting with a financial advisor to develop a tax-efficient retirement income strategy helps ensure that you keep more of what you’ve worked so hard to earn.

Creating a Secure Financial Future

A strong retirement plan for business owners includes more than just selling a business and hoping for the best. By structuring your business for maximum value, creating a solid succession plan, leveraging tax-efficient retirement accounts, and managing taxes wisely, you can pursue a financially stable future.

At Mirus Financial Partners, we specialize in helping business owners navigate these decisions with confidence. Whether you’re just starting to think about retirement or actively planning your exit, we’re here to help you create a strategy that protects your hard-earned wealth.

If you’re ready to start planning your financial future, contact us today. Let’s build a retirement plan that works for you—so you can step into the next chapter with confidence.

Mirus Financial Partners provides financial planning and investment advisory services; however, does not employ tax professional. The information provided in this article is for general educational purposes only and should not be considered tax advice. Tax laws and regulations are subject to change and may vary based on individual circumstances. Before implementing any financial strategies, always consult with a qualified tax professional to ensure they align with your specific tax situation and financial goals.

All investments carry inherent risks, including the potential loss of capital. Past performance is not indicative of future results, and there are no guarantees that any investment strategy will be successful. Market conditions, economic factors, and individual financial circumstances can all impact investment outcomes. Before making any investment decisions, consult with a qualified financial professional to assess your risk tolerance and ensure that your investment choices align with your financial objectives.