After you sell a business

You know deals, tax and cash. This page is shorter: what to do with the cash while you decide, and what the first year looks like.

Money came to you in another way? The other page assumes no knowledge of money.All the ways in

Separate the business from the household

For years the business paid for things that were really yours, and paid you on a schedule. After a sale, each of those lines falls to you.

Lines the business may have paid

Your salary and any bonus.
Health and life cover.
A car, fuel and parking.
Phone, software and subscriptions.
Travel and meals.
Retirement contributions.
Accounting and legal help.
An assistant or an office.

Write the list once, with a yearly figure beside each line. The total is the first honest number for what living costs now.

Keep the proceeds in an account that is not the household account. Pay the household a fixed amount each month from it, the way the business paid you.

What to do with the cash while you decide

The sale may have been the largest decision of your working life. The next decision can wait for its own day.

Where cash can sit

A bank deposit. Paid a rate, and covered by the country’s deposit insurance up to a limit for each bank. Ask each bank for the limit.
Short-term government bills. A loan to a government for weeks or months, repaid on a stated date.
A money market fund. A fund that holds very short loans and aims to keep its value level. The rules differ by country.
What the buyer holds back. Money you are owed and cannot yet touch. It belongs on your list of what you hold, with the date it is due.

This is a list of places cash can sit. It is not a list of what to choose.

The sequence of tax dates

A sale usually sets off a chain of dates: the tax on the gain, any estimated payments during the year, the year-end return, the final accounts of the company, and the dates when the buyer pays what it held back. Ask the accountant for the whole chain in writing, with an amount set aside beside each date. The amounts and the dates differ in each country, and this page gives none.

How this site treats tax

Who is paid by whom

The accountant. Paid by you, by the hour or a fixed fee. The work is to be right about the tax.
The lawyer. Paid by you. The lawyer who closed the deal may have been paid at the closing, out of the proceeds. That work is finished.
The banker or broker who ran the sale. Usually paid a share of the price at the closing. The job ends there.
An investment adviser. Paid by a yearly fee on the money, by the hour, or by commissions on products. Each pays the person to do something different.
The bank’s relationship manager. Paid by the bank, and the bank sells its own products.

Each is paid in a different way, and the way of being paid shapes what each is quick to suggest. It is the incentive, not the person.

Why not rush

Money in a deposit or in short-term bills earns interest while you decide. A business owner’s money was always working, and sitting still can feel like a loss. Waiting a few months in short-term holdings costs a few months of a modest rate. A wrong decision in the first month can cost more than that, and it is harder to undo.

A story that goes with this step

Who Pays Your Lawyer?

The first year

Spending changes shape. The salary stops, and spending is paid from the pot. The first year is when you find out what a month of your life costs when nobody else is paying part of it.

The hours that went into the business go somewhere. A Tuesday morning with nothing booked is a different thing from a holiday. It may help to decide what Tuesday looks like before choosing what to do with the money.

Buying another business soon after selling the first is a common idea. The second story below looks at why a small business bought for retirement so often goes wrong.

Stories that go with this step

Questions for advisers

Fees, conflicts and who holds the money. Someone who is sure of an offer is glad to answer these in writing.

How are you paid?By a fee, by a commission, by a share of the money, or by a salary. Each pays the person to do something different.
What do you hold of mine, and in whose name is it?Ask where the money sits and whose name is on the account.
What will this cost me each year, in dollars?A percentage is easy to wave away. A dollar figure for a year is harder to ignore. Ask for the total of every fee.
Who else is involved, and who else is paid?A firm, a seller of a product, someone who made the introduction: each may take a share.
Can I have that in writing?A written answer can be read twice, shown to a person you trust, and kept.
How would I take the money out, how long would it take, and what would it cost?Some products lock money in for good reasons. The time and the fee are worth having in writing.
Are you required to put my interest first when you recommend something?Ask for the answer in writing, with the name of the rule that applies.

Signs in an offer to slow down on

Most callers are doing a job. Many are paid when you buy, and that is the incentive; it is not a flaw in the person. Some offers are good. This list is for slowing down, not for hanging up.

Pressure
Someone hurries you, calls again and again, or says it is urgent.
What it usually means. The offer works better for the seller if you do not stop to think. A sound offer is still there next week.
A deadline
“This ends on Friday.”
What it usually means. The deadline is the seller’s. The dates that count are on government forms, and they are in step 3.
A promised return
A number is promised, with nothing written about what could go wrong.
What it usually means. A savings account or a bond states a rate and a date and says what is repaid. A high promise with no risk written beside it means the risk is somewhere you have not been shown.
A product you cannot sell
You are told the money cannot come out, or only after many years, or with a fee.
What it usually means. Some products lock money in for good reasons. Ask how long, and what the fee is in dollars.
Fees you cannot find
No page, no figure for the year in dollars.
What it usually means. Fees come out of your money every year. If they are hard to find, they are hard to compare.
A new account at a new firm
You are asked to move everything to a firm you have not used.
What it usually means. Moving can mean selling what you hold, and selling can have a tax cost. Ask what would be sold, and what it would cost, in dollars.
A request to move money fast
A wire, gift cards, cash handed over, or a transfer today.
What it usually means. Money sent this way is hard to bring back. A bank or a government office does not need it today. Call the number printed on your own statement.
An offer made because you sold
A call or a letter that arrives soon after the sale.
What it usually means. It is made because of the sale, not because of you. A sale of a business can be read about, and some callers read it.