or business owners in Tampa Bay entering their late 50s, the focus shifts from “how much can I make?” to “how much can I keep?” Tax planning isn’t just about compliance; it is a critical wealth-preservation tool. By leveraging specific deductions and deferral opportunities now, you can significantly enhance the net amount you eventually withdraw from your enterprise. Here are four high-impact strategies we often discuss at Transworld when preparing a business for its next chapter.
1. Supercharge Your Retirement Contributions
Don’t just save—save strategically. Maximize your contributions to qualified plans like SEP-IRAs or 401(k)s.
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The Benefit: These allow for substantial tax-deferred savings.
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The Math: As an owner, you can often contribute up to 25% of your compensation to a SEP-IRA. This directly reduces your taxable income today while building a robust liquid fund for your post-business life.
2. Leverage Section 179 for Immediate Impact
If your business requires equipment, vehicles, or machinery, timing is everything. Under Section 179, you can often take an immediate deduction for the full purchase price of qualifying equipment rather than depreciating it over several years. This lowers your current tax burden and keeps vital cash flow within the business during these critical pre-exit years.
3. Evaluate Your Entity Structure
Is your current legal structure still serving your financial goals? Many owners who started as sole proprietorships find that converting to an S-Corporation offers significant advantages as they scale.
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Pass-Through Savings: Benefit from pass-through taxation.
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Section 199A: You may qualify for the 20% Qualified Business Income (QBI) deduction, which can drastically reduce the effective tax rate on your business profits.
4. Strategic Family Employment
If you have family members working in the business, ensure they are in legitimate, documented roles. Hiring relatives allows you to shift income to lower tax brackets and provides them with their own retirement plan contribution opportunities. It’s a way to keep wealth within the family “ecosystem” while maintaining smooth operations.
The Michael Shea Perspective
Tax laws are complex and ever-changing. While these strategies are powerful, they must be executed correctly to avoid red flags. I always recommend engaging a certified tax professional to tailor these moves to your specific situation.
Prudent tax management today means more wealth for your retirement tomorrow.
“It’s not just what you sell it for; it’s what you clear after the closing table.”
Michael Shea represents the Tampa Florida Transworld office. In business since 2005, he has established a reputation as a trusted business broker across Florida’s key markets- from Tampa to Orlando, Melbourne, and more. Over the past two decades, Michael and his team have closed over $1 Billion in sold business volume and presided over more than 450 transactions. His credentials include the IBBA Certified Business Intermediary®, and most recently, the prestigious Certified Exit Planning Advisor® (CEPA) credential.