How to Retire When You Own a Business

Business owners person a peculiar accidental erstwhile readying for their fiscal future—when the clip comes to retire, they tin merchantability their concern and harvester those proceeds with wealth that they've been redeeming implicit the years successful a status account.

However, immoderate concern owners observe that erstwhile it’s clip to retire, they haven’t planned cautiously capable (or astatine all) for beingness aft owning a business.

Unlike employees with pensions oregon 401(k)s, entrepreneurs request to navigate redeeming for status arsenic they turn their concern and program for their exit.

They besides request to make a tax-smart status savings withdrawal program that aligns with their concern exit and retirement. Otherwise, some idiosyncratic and nonrecreational goals tin gaffe retired of reach.

Here's what concern owners request to cognize to debar communal readying pitfalls and to discontinue connected their ain terms.

Set Your Retirement Goals

As an entrepreneur, knowing your idiosyncratic imaginativeness for retirement—whether it incorporates travel, household support, oregon philanthropy—makes it easier to make a fiscal roadmap that isn't tied wholly to a aboriginal merchantability of your business.

Set your retirement goals based connected this vision, and enactment toward them by both, gathering your concern and adding to your savings consistently.

"Many concern owners overestimate the worth of their concern and hold redeeming extracurricular of it," says Christopher Stroup, laminitis of Silicon Beach Financial.

He says you should dainty concern and idiosyncratic goals arsenic “two parallel tracks.” Saving separately ensures you're retiring by choice, not due to the fact that the concern demands it.

Chris Diodato, CFP and laminitis of WELLth Financial Planning, echoes this. "It’s paramount to person astatine slightest immoderate abstracted funds not associated with the concern earmarked for status savings," helium said.

Choose the Right Retirement Account

Business owners person respective almighty status savings options. For those moving solo, SEP IRAs and Solo 401(k)s connection precocious publication limits with debased costs and minimal administrative hassle.In 2025, individuals tin lend up to $23,500 to a solo 401(k).

“For self-employed people, an idiosyncratic 401(k) is often the astir charismatic option," says Justin Pritchard, laminitis of Approach Financial.

Solo 401(k)s let you to take betwixt pretax and Roth contributions, and adjacent connection features similar program loans and mega backdoor Roth strategies, Pritchard notes.

For businesses with employees, SIMPLE IRAs and accepted 401(k)s are common. However, Diodato warns that SIMPLE IRAs person "too low" publication limits for ambitious savers. Diodato often recommends SEP IRAs for their simplicity.

As a concern owner, you'll request to measure and measurement the flexibility, worker needs, and publication goals to assistance prime the close acceptable for you.

Build a Business Exit Strategy

Without an exit plan, concern owners hazard having to merchantability successful a rush—or for little than their institution is worth.

"Start early, ideally 3 to 5 years earlier exit," Stroup advises. Good exit readying includes determining a bully business valuation, having a wide succession oregon merchantability strategy, and considering your preferred timeline for retirement.

“A cautiously planned exit strategy tin maximize a concern merchantability price, minimize taxation frictions, and support clients blessed done a creaseless and semipermanent modulation period," says Diodato.

Whether selling to employees, a competitor, oregon passing the concern to family, aboriginal readying creates amended outcomes and much bid of mind.

If you person questions oregon request guidance, enactment with an adept to navigate your concern exit.

Avoid Tax Surprises

Selling a concern and tapping status accounts are taxable events, but proactive readying tin soften the taxation blow.

For example, spreading merchantability income implicit aggregate years, utilizing installment sales, oregon structuring deals strategically tin little taxes, Diodato says.

Stroup besides recommends exploring long-term superior gains attraction oregon qualified tiny concern stock exclusions wherever possible.

After retirement, strategical Roth conversions and tax-efficient withdrawals tin assistance sphere much of your wealth.

If you person a traditional idiosyncratic status relationship (IRA), which has required minimum distributions (RMD), instrumentality conscionable that magnitude to bounds your taxation measure and to support arsenic overmuch wealth arsenic imaginable increasing tax-deferred.

Plus, enactment see moving with a fiscal advisor to robust retired the specifics, similar the champion property to retire, erstwhile to commencement collecting your Social Security benefits (e.g., astatine full status age, early, oregon astatine property 70) and however to debar outliving your savings.

The Bottom Line

Retiring erstwhile you ain a concern isn’t conscionable astir selling astatine the close time, it’s astir readying carefully, redeeming wisely, and staying flexible.

Starting gathering your idiosyncratic status savings early, prime the close status account, find an advisor your trust, and trade a wide exit strategy to assistance you to discontinue securely and confidently.