You can decide to sell your business to a family member or someone else at any time. When you decide to sell, you get certain advantages. You will receive cash and/or assets that you can then use to fund your retirement, maintain your lifestyle, or pay your estate taxes. Depending on your sale agreement and financing, your family member(s) may pay for the business over time, providing you with an income stream for years to come.

You also get control over when and how your business is passed on, because you can sell at any time you choose during your ownership of the business. You also can choose to sell your company at retirement, or specify that it is to be sold at the time of your death.

Some tax regulations do apply to the sale of your business. You must sell it for the full market value, and both parties in the sale must arrive at a value that holds up legally. Remember, the market value of your business may be well above the actual dollar value of its equipment, property, inventory, and other assets.

The IRS will examine the full market value you arrived at. If the IRS decides the value is too low, it may determine that you are giving a gift to the buyer besides the sale. In that case, it could be subject to gift or estate taxes. Value your business too high, and you might be subjecting the buyer to debt they can't handle. Also, if the sale occurs before your death, it may be subject to capital gains tax. In some cases, selling a business can help your heirs lower their tax burden. In others, it maximizes it. Be sure to get advice from a tax professional and a lawyer before you decide to sell.

You must carefully evaluate all the possible tax scenarios, as well as arrive at a sound valuation for your business. Only then can you determine whether selling your business is the best strategy for you and for your family members or other successors.