Wealth Strategies for Business Owners
You Built the Value. Now Protect It.
Your business is worth $5M, $20M, maybe $50M or more. Years of sacrifice, risk, and hard work. When you sell, you face the biggest tax bill of your life—unless you plan ahead.
The Exit Reality
The Brutal Math of Business Sales
On a $20M sale in California, you could lose $7+ million to taxes. That's generational wealth—gone.
| Business Value | Capital Gains | Federal (20%) | NIIT (3.8%) | State (CA 13.3%) | Total Tax |
|---|---|---|---|---|---|
| $5M | $4.5M | $900K | $171K | $599K | $1.67M |
| $20M | $19M | $3.8M | $722K | $2.53M | $7.05M |
| $50M | $49M | $9.8M | $1.86M | $6.52M | $18.18M |
The Business Owner's Dilemma
Three Critical Challenges
All Eggs in One Basket
70-90% of your net worth in a single illiquid asset. Subject to industry disruption, economic cycles, and your health.
The Capital Gains Trap
When you sell: 20% federal + 3.8% NIIT + up to 13.3% state. Total rate can exceed 37%.
The Succession Question
Sell to third party? Family? Employees? Each option has different tax implications and timelines.
The Solutions
Capital Gains Deferral Strategies
Defer, reduce, or eliminate capital gains taxes on your business sale.
Installment Sale
Seller financing over 10-30 years
Structured Installment Sale (SIS)
Third-party intermediary structure
ESOP Exit
Sell to employee-owned trust
Qualified Opportunity Zone
Reinvest gains in designated areas
Start 3-5 Years Before Sale
The Pre-Exit Planning Timeline
The earlier you start, the more options you have.
Foundation
- •Establish Section 7702 policy (maximum insurability)
- •Begin funding with business profits
- •Build cash value foundation
- •Document business value for comparison
Preparation
- •Accelerate policy funding
- •Clean up business for sale
- •Improve EBITDA, reduce owner dependency
- •Identify potential buyers
Exit Year
- •Execute sale (installment, SIS, or other)
- •Continue funding Section 7702
- •Begin Roth conversions if appropriate
Conversion
- •Convert installment payments to tax-free growth
- •Eventual tax-free retirement income
- •Death benefit protection for family
The Ultimate Play
Tax-Free Income Conversion
The Flow:
- Sell business via installment structure
- Receive annual payments ($500K-$1M+)
- Pay taxes on installment income (spread over years)
- Fund Section 7702 policy with after-tax proceeds
- Cash value grows tax-free
- Access via tax-free policy loans in retirement
One tax hit now → Zero taxes forever on growth and distributions.
Example Conversion
Qualified Small Business Stock (QSBS)
If your C-Corp qualifies, the first $10M (or 10x basis) of gain can be excluded from federal tax.
Potential Tax Savings on $15M Sale
Real Results
Business Owner Case Study
Mike
Manufacturing Company Owner, Age 52
The Challenge
Wants liquidity but not massive tax hit. Concerned about minority partner conflicts. Needs retirement income of $400K/year. Plans to retire by 60.
The Strategy
Year 1-3: Establish Section 7702 at $100K/year. Year 3-5: Buy out minority partners via installment. Year 5: Structured Installment Sale over 20 years. Post-exit: Continue funding Section 7702 with $300K/year.
The Outcome
Total taxes paid: ~$4.5M over 20 years vs $5.4M lump sum. Tax savings: ~$900K timing benefit. Tax-free retirement income: $400K+/year. Death benefit protection: $8M+ to family.
Full-Service Business Support
IWB Business Services
Beyond exit planning, we offer comprehensive business financial services to optimize your operations today.
IWB Business Accounting
Monthly bookkeeping and financial reporting for businesses with $250K-$5M in revenue.
- ✓Monthly bookkeeping & reconciliation
- ✓Financial statement preparation
- ✓Cash flow management
- ✓Tax-ready books year-round
IWB Strategic CFO
Fractional CFO services for strategic financial leadership without the full-time cost.
- ✓Financial strategy & planning
- ✓KPI dashboards & metrics
- ✓Cash flow forecasting
- ✓Exit readiness preparation
IWB Elite Tax Planning
Proactive tax strategy beyond compliance—Tax Alpha that creates value before events.
- ✓Entity structure optimization
- ✓Tax projection & planning
- ✓Exit tax minimization
- ✓Integrated wealth coordination
Questions
Common Questions from Business Owners
We specialize in business exit planning and understand the complexities you face.
Ask Your Question"On a $20M sale, proper exit planning saved me over $900,000 in taxes— and created a tax-free income stream for life."
Ready to Plan Your Exit?
Schedule your exit planning strategy session. We'll analyze your business, timeline, and goals to design a customized exit and wealth transfer strategy.