Month: August 2019

If you turn 50 this year, the federal tax code offers a few ways to contribute more tax-deferred money to your retirement accounts. Here’s a look at how much you can save in some popular plans.

Company Plans

Saving in a 401(k) or 403(b) plan just got a whole lot more exciting. At age 50, you can contribute an extra $6,000 annually. That makes a total of $25,000 a year allowed, which can help you catch up more quickly. Or if your company has a SIMPLE plan, you can put in another $3,000 for a total of $16,000 annually.

Individual IRAs

If you meet income qualifications, you can take advantage of a traditional or Roth IRA’s tax deferral to the tune of an extra $1,000 annually. That makes the total $7,000 you can contribute each year (as long as you have at least that in earned income).

If you plan to sell your business within a few years, there are a number of ways to do so. Here are a few scenarios you might consider before selling.

CASH

You can sell your entire business, its assets or an equity share. In any case, cash is king. A cash deal may involve the entire sale price upfront, an initial sum plus annual payments, or only annual payments. No matter how the sale is structured, only cash will change hands.

Seller financing via installment payments is riskiest because it depends on the new owner’s continuing success. Combining upfront and annual payments could include an earn-out agreement for after-sale payments, where the seller receives bonuses or consultant fees annually. Full payment in cash upfront eliminates many risks, but could increase your tax liability.

EQUITY OR ASSETS

If you will gradually leave your business, you might give a new partner partial equity in return for payment now and at your agreement’s conclusion. This entails some risk — you haven’t fully divested yourself, and bringing on another person is always risky — but you could earn more over time. Work with an attorney to create an ironclad agreement.

Selling your business assets could be an option if you will dissolve the company. This typically is least risky, but price the assets fairly and act before you need to have a fire sale.

LAYING THE GROUNDWORK

Valuing your business requires a bit of pre-sale work, which includes comparing your business to peer competitors and creating a succession plan (if applicable). The more work you complete up front, the better your sale prospects will be.

However it’s structured, a business sale generally has tax consequences that may include capital gains, gift, generation-skipping and estate taxes. You may want to consult a valuation expert, in addition to working with tax, legal and financial professionals, before you begin the process.

Ways To Structure A Business Sale – If you plan to sell your business within a few years, there are a number of ways to do so.

Supercharge It – If you turn 50 this year, the federal tax code offers a few ways to contribute more tax-deferred money to your retirement accounts.

Saving For College – Paying for college or university has become increasingly expensive.

Profile – How to establish residency in a lower tax state

Working Capital And Your Company – You’ll need to open your company wallet if you want to grow your business

Nannies, Housekeepers and Taxes – If you hire a household worker who will earn at least $2100 in 2019, you will have to pay employment taxes.

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