Retirement Planning - An Essential Pillar of Business Succession

We, at BluePrint CPAs, take a unique approach to succession planning. We look at the range of needs and deliver comprehensive planning services to entrepreneurs in Windsor, Sarnia, London, Chatham and beyond. This article some important aspects or retirement planning for business owners looking to exit their business.

Retirement Planning Involves Preparing a Budget

Chances are that if you've built a successful business, it has been your life's work. Putting the time and effort into a successful business is an exhausting endeavour and entrepreneurs generally need to access the value of their company in order to retire. While we help with maximizing the value of your business and tax planning, this article discusses our unique approach to retirement planning as part of your comprehensive succession plan.

Hiring The Right Investment Advisor

Whether you sell your business outright or transition it to a family member, there may be a need to re-invest proceeds from the sale and generate an income stream in retirement. There are many strong investment advisors to choose from so it is important to know what it is you're looking for. We believe it is important to find an advisor that is proactive with your wealth management. They must work hard to remain abreast of trends in capital markets and should have an approach that is unique to your specific needs. If your portfolio is sizeable enough, it is inadequate for your funds to be pooled in a larger fund that may have sub-par tax outcomes when they rebalance the portfolio. We help you ensure that your investment advisors are implementing a tax-advantaged portfolio strategy when taking account of your corporate tax structure.

Identifying Sources of Income and Planning for Related Taxes

Many retirees will also be able to access CPP and government assistance. Using these sources of income as part of your retirement budget is important to ensuring you're living the best lifestyle possible. Other sources of income can include repayments of a vendor take-back on the sale of your business, investment income from your portfolio, including RRSPs and RESPs and other innovative sources of cash flow to turn your net worth into cash.

Budgeting For Basic Costs of Living

It's straightforward, and an often overlooked aspect of succession for business owners, to create a budget for your basic living expenses such as food, entertainment, automotive expenses, property taxes, utilities and insurance. All of these basic fixed costs should be compiled so you can compare it to fixed sources of income and variable sources of income such as investment returns.

Planning for Large Expenditures Such as Retirement Properties

Some business owners want to build a retirement home or develop a simple cottage on vacant land. Others want to make one-time gifts to children, charities or friends. Large, non-recurring expenditures should be factored into your retirement budget and your investment policy.

Routine Gifts and One-Time Gifts

If charitable giving is an important part of your life, you may want to determine the most tax-effective form of giving. If your children need access to resources, you could consider making a gift in advance of your death. Often times, business owners want to spend more time with their grandchildren when they retire. Special budgets for activities such as hockey, skiing, competitive dance, mini-vacations and other gifts should be budgeted so that you're able to manage your fixed income properly.

Travel and Other Perks of Your Newfound Time

Many entrepreneurs have deferred or avoided travel while they were building their businesses. Upon retirement, some are looking to go to Europe, others may want to spend a month in Florida. Regardless of destination, it is important to budget the transportation, lodging, health insurance, meals and entertainment in order to properly plan for the expenditures and balance them with your sources of income.

Prepare Yourself Psychologically

Develop new routines and hobbies in advance of retirement. For many entrepreneurs, retirement marks a paradigm shift in their identities. We facilitate discussions about friend networks, hobbies and personal investments so that you can transition into your new role without feeling a significant personal loss to your identity.

"The harder you work, the harder is to surrender." Vince Lombardi

How Does BluePrint CPAs Help?

Our firm is comprised of financial management specialists that have deep experience in budgeting, financial forecasting and tax planning. We can ensure that your sources of income minimize tax burdens and that your cash budget is secured and allows you to live the lifestyle you've earned.

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Kit Moore, CPA, CA is an entrepreneurial chartered accountant (CPA, CA) that assists entrepreneurs with comprehensive succession management, business strategy, mergers and acquisitions and HR solutions. We're pleased to speak with you if you're preparing for an exit from your business.