There are tax advantages to saving in a retirement fund while the sale of your business may attract capital gains tax.
Failing to plan for retirement is also a mistake, as you do not know how you will feel about continuing to run a business when you are older and potentially have health issues. Running a business without giving it your full energy may also lead to the business losing its edge.
You may become ill or disabled before retirement age, resulting in the business losing your expertise and relationships with clients. This may impact the value of the business. Ideally, you should protect yourself against and back it with life cover to ensure that you or your heirs can realise your share of the value of the business should you be disabled or die.
The risk of relying on selling the physical premises is that you don’t know what the property market will be like when you retire. You will become a landlord, which introduces new issues, including the risk of your tenant failing to pay rent. It isn’t easy to manage tenants, so you may want to consider appointing a managing agent to take care of this for you for a fee.As a small business owner you should plan for your retirement while you are building your business.Then choose appropriate investments which will provide diversification of assets and returns as you build up to that goal.
Your business can be an asset in your retirement plan, but it should not be the only one and you should take care estimating its value at retirement.There are tax advantages to investing for your retirement in a retirement fund instead of only investing in your business. within certain limits, the growth in the fund is tax free and you may be able to take some capital tax free at retirement if you have preserved your savings.