Practical Business Coaching

By Ben Needles

 Hopefully, before selling a business, you meet with a CPA or tax accountant and get an estimate on how much of your proceeds will be going directly to Uncle Sam if you pay them in a lump sum at time of sale. You dont want to save this surprise for after all is said and done, because not only will it most likely be a shock, but you will have given up your chance to do anything about it.

Planning is everything. For this article I will assume you are not doing a 1031 business exchange, that is selling your business and buying another similar business taking into consideration all the IRS guidelines and timelines. Its pretty rare to see this, but it can defer all of your capital gains tax if done correctly. A 1031 Exchange is more commonly implemented with real estate.

Depending on how the business is sold, the gains may be taxed as long term capital gain, short term capital gain, ordinary income, etc. and if you are selling an asset in a C-Corp you may face double taxation. So, the idea is to minimize your tax bill and maximize your proceeds no matter what situation you are in.

One option is with a Self Directed Installment Sale. The structure must be in place before the buy/sell agreement is signed. The gist is to receive the sale proceeds in installments and only pay capital gains tax as you receive the income. This has the effect of allowing the majority of money you would have paid immediately in taxes to continue earning compounded interest for you for many years, thus increasing your bottom line by a significant amount.

The details are a bit too complex to fully outline in a short article, but both an LLC and a Trust are created for you and set up meet IRS criteria for favorable taxation of installment sales. Your asset gets transferred to the LLC prior to sale, and your buyer purchases from your LLC. The trust buys the shares of your LLC from you via an installment agreement and you pay taxes on your gain only as you receive the payments.

You, the seller, are able to control when the payments begin and how long they will be spread out. This allows for maximum flexibility to control your income, and plan for future tax savings as well. Since your buyer paid cash in exchange for your property, you are not dependent on them to make the installment payments and you have transferred the risk of refinance or default. This is done by using an independent third party administrator and your money is safely invested in a principle protected insurance product to be used solely for the purpose of paying the installments.

If you pass on before receiving all of the payments due, the remainder of the installment payments pass to the beneficiaries of your choice.

Seeing an example of a taxed sale vs. a Self Directed Installment Sale side by side will show you how much of a difference in overall return this strategy will provide. This can make the process of the sale more palatable and provide a dependable income stream for retirement.

The tax benefit of this approach is similar to your 401K or IRA account. You reduce your current income by the amount of your annual contribution and thus defer the tax you would have paid on that income amount. Those funds are invested in stocks and bonds and grow in value, sometimes dramatically, for the period before you retire and start taking distributions. When you start distributions, the amount is treated as ordinary income and you are taxed at your much lower (you are no longer working and earning a big salary) income tax rate at the time.

The Self Directed Installment Sale allows you to similarly defer your capital gains tax from the sale of your business. Instead of paying all of your capital gains at time of sale, you set up your SDIS to pay out your sale proceeds over time. If you pay all of your capital gains tax at time of sale, that money is gone forever. However, with this vehicle, you spread your receipt of the sales proceeds out over, 15 years for example. When you receive your distribution, you are then taxed for the portion of that distribution that is attributed to the capital gains - generally about 15%.

The difference in after tax proceeds are dramatic and are demonstrated by a complex analysis called an illustration. I will try in an abbreviated fashion, however, to demonstrate the potential impact. If you sold your business and you had a capital gain of $3.46 million, your lump sum capital gains tax payment at a 15% rate would be $519,000. In the SDIS you would keep the entire sale proceeds of $3.46 million and take distributions over a 20 year period or whatever period you chose. You receive an annual payment over 20 years, that would consist of 1/20 of the principal, 1/20 of the capital gains, plus investment returns.

If we did an illustration of this case and compared selling the business and paying all the capital gains up front and invested the remaining proceeds in a 6.85% compound growth portfolio versus the SDIS paying 1/20 of the capital gains annually, you would gain an $831,000 advantage in after tax proceeds. Not to bad for a little advanced planning.

About the Author (text)

Dave Kauppi is president of MidMarket Capital, and editor of The Exit Strategist Newsletter. MMC is an M decorative wall switch plates

How To Use Autoresponder Marketing For Maximum Profits
By Jason Rusch

 Businesses like to use autoresponders to communicate with people who email them. This lets the initiator know two things: “we appreciate your business” and “we will be in touch with you within X amount of days”. These kinds of emails are sent instantly to anyone who sends an email to a business/website address. Some people will use autoresponders when they go on vacation. Most autoresponders are used by website owners. Have you ever gotten an autoresponder? The chances of you getting an autoresponder when you are communicating with a company are great.

Uses for AutoResponder Marketing

Sometimes it’s annoying getting an auto response email when you take the time to write/email the business or website. A response like this makes the whole communication process impersonal.

Autoresponders cannot be designed to address any specific issue that gives it a unique trait. However, email forms can be placed on a webmaster’s website in such a way that different responses will be sent according to the issue. When a webmaster utilizes this way of response, the marketing program can be geared towards the person’s issue and doesn’t seem so uncongenial.

Is it hard to set up? Not at all. Instead of using a basic email address where persons need to contact the website operators, webmasters, instead, can set up a short contact form. The form should have spaces set aside for the person’s name, age and email address.

To narrow down the person’s issue, forms will need a drop down box with a list of possible problems or suggestions to why that person needs to speak with the website owner. What kinds of things should be listed? What kinds of problems you should have listed in this drop down box will depend on the sort of business you have. If they want to send in the email, it should be compulsory that they pick a reason for communication. What does this mean? It means they cannot submit the form without a reason being chosen. The autoresponder program will then send the appropriate marketer response to the person’s email. There should be a place set aside for the person to air out their grievances or concerns. Make sure there are enough characters on the form because people will get upset when they cannot type out their problem entirely.

The autoresponder email marketing program will need at least one reply per drop down item. The responses they get should fit what their issue is about. For example, if a person has a problem with your account, your autoresponder email should say something to the effect of, “Thank you for your email. Please give us 24 hours to check on the status of your account and to report back to you.” If you have any questions or want a faster response, you can contact us by phone.”

Do you want to build a super responsive list for your business that will put money in your pocket on auto pilot? If so check out my autoresponder marketing report today! Simply click on the blue link www.mailinglistsexposed.com

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What To Do When You Want To Start A Home Based Business
By Koz Huseyin

 So, you want to start a home based business. Realize that this is one of the best ways to secure your future, and have a good chance to create a great nest egg, in the future. Getting there is not going to be easy, and will require a lot of your time and energy. So, what to do when you want to start a home based business?

There are several things to consider when you want to start a home based business. Here are some things that you will need to go think through and do:

* What you want to sell or offer as service?

* Why are you thinking of starting a home based business?

* Do you want to start with your own home business idea or join a home business opportunity?

Let’s look into more detail at each of these questions. Answering these questions will go a long way both in the planning of your home business, and in the actual day to day running of your home based business.

* What you want to sell or offer as service?

One of the biggest considerations is how you will serve people. This comes in the form of some kind of product or service.

If you want to start a home business with your own idea, then you will likely have an idea for a product or service. You will want to find out the potential demand for the product or service, and also to look for the potential supply for a product. This applies to manufacturing also, as you will need to purchase something to be able to make the product.

* Why are you thinking of starting a home based business?

One of the most vital questions to ask yourself is why do you want to start a home based business? Answering this question will go a long way, especially when you run your home business.

You see, motivation is a key for action. And there are going to be times when you question whether you want to continue. Having the answer to your why, will allow you to keep on.

* Do you want to start with your own home business idea or join a home business opportunity?

When you start a home business, you have 2 options - that of starting with your own home business idea or with a home business opportunity. They both have benefits and negatives, and your choice will depend on your needs.

For example, a home business idea of your own may offer greater potential for major success, but it also presents a higher risk of failure, especially for novices to business. Another option is home business opportunities. Here you can start with no experience, and have a good chance to make success.

1′000’s of people all around the world make money working from home. So, why not you? Visit home business ideas and start a home based business.

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