Thinking about hanging up the tool belt and calling it a career? Sure, you’ll still tool around the house (see what we did there?) fixing this and making that, but as far as heading out to the job site every day and dealing with the hassles and headache of running a business, you’re over it. It’s time to retire.
But how? You’ve got equipment, heavy-duty tools, maybe even a building. What do you do with all the stuff that comes with running a contracting business when you are ready to stop running a contracting business?
The easiest way is to liquidate all your business assets and use them to fund your retirement. Liquidations aren’t just for businesses going bankrupt that are trying to pay off creditors, they’re also an ideal way for any business to close its doors. Selling all the business’ assets makes the final accounting paperwork that much easier.
Once everything is sold and all your creditors are paid off, you write a check to yourself for the remaining balance. Then you ride off into the sunset and enjoy some extra padding for your golden years.
How to Sell a Business’ Assets
There are two ways you can sell the business’ assets; you can sell the entire business to someone else, or you can sell individual items. If your contracting business has a good reputation, you have employees that you don’t want to force into unemployment and you have one or several people still connected to the business who want to take it over, you can sell the business to that person or people.
The business will still be in operation, but you’ll no longer own it. Going this route, you could either sell it outright or keep a partial ownership and collect a pension (otherwise known as your part of the profits). If you think the person buying the business can continue the business’ success, this is an option worth investigating, otherwise, you might want to just get a cash payment and walk away.
But if you’re a one-man operation or there aren’t any interested buyers, liquidation is the way to go. You can have a “Retirement” sale for any stock you might have, and then sell all the equipment after the inventory is sold. If you own the building, you can put that up for sale or lease as well. Or you can hold an auction for everything from the work truck that’s a workshop on wheels, down to the shelving in your office.
You would be amazed the things people will buy at an auction. As you are probably aware, things sold at auction go to the highest bidder and in most cases, the winning bid must be paid that day (or proof of verifiable funds must be provided in the case of high-end vehicles and real estate purchases), so you’ll walk out of the auction with a good idea of how much fatter your retirement account has become.
Crunching the Numbers
Financially, liquidating assets is a pretty typical accounting function. All the ledgers will be updated to reflect that all assets have been converted to cash and that all liabilities have been paid. You will file your tax return as you normally would. It will just be the last one with business income. Now deciding what to do with the cash is the question.
You could just stick it in the bank, but if you’ve spent years running a business, the money you get from the sale or liquidation should continue to work for you. Hiring a reputable financial planner to help you make sound investments is a wise approach. Any work you do after selling or liquidating your business should be work you want to do, not work you have to do.