How do I turn business wealth into personal wealth?

Building wealth inside your business and building personal wealth are not the same thing.

You can own an incredibly successful company, have a significant net worth on paper and still have surprisingly little wealth working for you outside of the business.

There isn't one answer. How you move money out of a business can depend on your business structure, taxes, cash needs, future plans and what you ultimately want that money to do. That's where I come in.

Should I take money out of my business?

Not necessarily. I don't start by saying, “Let's take more distributions.” First, I want to understand what another dollar can accomplish inside your business versus outside of it.

I don't want to weaken a great business just to build an investment account. But I also don't want capital remaining inside the business indefinitely simply because no one has developed a plan for what comes next.

How much of my wealth is actually outside my business?

I want to look at your personal balance sheet alongside your business. How much personal liquidity do you have? What have you accumulated in retirement accounts? What investments do you own outside the company? How concentrated is your net worth?

Where should money from my business go?

Some money may belong back in the business. Some may belong in retirement accounts. Some may need to remain liquid. Some may be positioned for longer term growth. Some may eventually be used to create income. Some may have a tax or legacy job.

There isn't one destination for the money because there isn't one job for the money.

What about taxes when moving money out of my business?

Taxes absolutely matter. How money moves from a business to its owner can depend on the entity structure and the particular transaction. That's why I don't want investment strategy and tax strategy having separate conversations about the same dollar.

This is where I want your CPA involved. My job is to help determine what we're trying to accomplish with the capital. Then we can work with your tax professional to evaluate an appropriate way to accomplish it.

Why build personal wealth outside my business?

Because eventually, wealth outside the company can give you something incredibly valuable: options.

The option to retire. The option to sell when the timing is right. The option to keep the business because you love running it. The option to step back, start another company, help your family or support causes you care about.

The goal isn't simply to get money out of your business

The goal is to create financial independence from it.

You built the business to create opportunities. Your wealth should eventually create some for you, too.