The Final Chapter: Exit Strategies for Practice Owners – Part 3: Maximizing Value and Minimizing Taxes – The CPA’s Role in a Successful Exit

Selling your practice is a major milestone—one that deserves careful planning, not a rushed decision. Whether you’re retiring, shifting gears, or simply stepping back from ownership, how you exit can have a lasting impact on your financial future. A well-crafted exit strategy can help you preserve more of your hard-earned wealth, minimize taxes, and set the stage for long-term security.

One of the most important allies in this process is your CPA.

A CPA does far more than file your taxes. They’re your strategic partner—helping you structure the sale, plan for retirement, protect your legacy, and manage your finances after the deal is done. Let’s explore how they can help you make the most of your exit.

Structuring the Sale: Asset vs. Stock

The way you sell your practice significantly affects your tax liability and the appeal of the deal to buyers. The two most common structures are:

• Asset Sale: You sell individual components of your practice—equipment, patient records, goodwill, and more. Buyers often prefer this route for its flexibility and potential tax benefits. For sellers, the tax treatment is generally favorable, especially for intangible assets like goodwill, which are typically taxed at long-term capital gains rates. However, items like depreciated equipment may trigger ordinary income taxes through depreciation recapture—something your CPA can help you navigate.

• Stock Sale: You sell your ownership interest in the business. This approach is usually simpler and also qualifies for long-term capital gains treatment. However, buyers may be more hesitant, as they assume the business’s liabilities along with its assets.

Payment Terms: Lump Sum or Installments?

How you get paid matters just as much as how the deal is structured. An installment sale, where the buyer pays over time, can help spread out your tax liability and provide a steady income stream during retirement. But it also comes with risks—like buyer default—so it’s critical to structure it carefully. Your CPA can help ensure the terms are both tax-efficient and secure.

Planning for Retirement

Even before the sale is finalized, your CPA can help you shift your focus to retirement planning. This is the time to take full advantage of tax-advantaged accounts like 401(k)s, IRAs, and HSAs. Maxing out contributions can reduce your taxable income and boost your savings. Your CPA might also recommend a Roth conversion, allowing you to pay taxes now in exchange for tax-free withdrawals later. And don’t overlook HSAs, which offer a rare triple tax benefit: deductible contributions, tax-free growth, and tax-free withdrawals for qualified medical expenses.

Protecting Your Legacy

Selling your practice is also an opportunity to think about your legacy. What happens to your wealth after you’re gone? A CPA, working alongside your attorney and financial planner, can help you establish trusts, gifting strategies, or charitable giving plans that reduce estate taxes and ensure your assets are distributed according to your wishes. These strategies aren’t just about saving money—they’re about aligning your wealth with your values.

Managing Life After the Sale

Once the sale is complete, your financial picture will change dramatically. Whether you receive a lump sum, installment payments, or equity in another business, your CPA can help you manage that income wisely. That might include building a new investment strategy, drawing income in a tax-efficient way, or timing Social Security benefits to maximize your payout.

Your Next Chapter Starts Here

Selling your practice is a big transition—but with the right guidance, it can also be a powerful opportunity. At Jones & Roth CPAs and Business Advisors, we specialize in helping practice owners navigate every step of the exit process. If you’re considering selling your practice, let’s talk about how to make your exit a smart, secure, and successful one.