How to Model the Sale of a Business

0:00 Welcome! This video will walk you through how to model the sale of a business inside Income Lab. To get started, first select a household.
0:09 Then, click the pencil icon to get to the plan edits of the household.
0:14 From there, find the Assets tab. And then we'll go to the Other Assets section. Here I've already added an input for my business, but if this is your first time entering that business, you want to give that business a name, select the ownership, And then open the field for Type and select Business as
0:32 the Type, and then put in the current value of the business. After that, you'll see the gear icon show up here on the right.
0:40 Click the gear icon, and then check the box that says Include Planned Sale. You'll You'll have two options to use for the projections for the Business Sale amount.
0:50 You can either use the Assumed Growth Rate. In which case, you'll select the calendar icon to select the future date of the planned sale.
0:59 And then you can put in the assumed annual growth rate for the business. at the bottom, you'll see the field for adjusted bases at sale.
1:07 So if you have any amount that you want discounted for tax purposes, you can enter that here. the plan. The other option, and the one we see more frequently, is the planned sale price option.
1:17 Here, you can follow the same steps to use the calendar icon to select the month and year of the future business sale.
1:23 You can enter a planned sale price, and then you can also enter that adjusted basis at sale here as well.
1:31 Once you're done, hit save and then click finish to have the software update your inputs and get back to your plan.
1:38 A great place to see the planned sale happen is inside Life Hub, So here we can go to Life Hub, find the year in which the business sale was happening, which you can see by the milestone icon here in 2030, and then we can go to income, and we'll see the business sale reference on the other income section
1:56 . We'll see any taxes tied to the business. You'll see any additional savings. So here, because it's a large one-time income stream coming in, the software will automatically calculate the extra savings from the business sale, in this case going into a taxable account.
2:12 And if we go to the father. The following year, we'll now see that the value of the business in the other assets tab has gone down to zero, showing that we've sold that business.
2:21 That's it. Thank you for viewing this video. Please reach out to our team if you have any questions.