Good morning! Every business owner eventually asks two questions: “What happens to this thing when I’m done?” and “How would I even pay to buy one?” Today we answer both, with slightly more humor than the IRS intended.

This week’s lineup:

🏗️ What happens to the business when you’re done running it? Most owners have no plan, and each of the four options is taxed differently.
👨‍👩‍👧 Passing the business to your kids without a family blowup: 2026’s estate tax rules make this easier. Sibling dynamics do not.
💰 How to actually pay for a business: SBA loans, seller financing, and the other ways buyers cover a purchase price they don’t have in cash.
📥 The Business Financing Options Worksheet: A side-by-side comparison followed by a personalized “build your deal stack” worksheet.

The Basics

🏗️ What happens to the business when you’re done running it?

Photo by Blake Wisz on Unsplash

The Quick & Bristly: Most business owners have no exit plan. There are only four exits — sell, gift to family, ESOP, or liquidate — and each one gets taxed completely differently. “I’ll figure it out later” is not a strategy, it’s a tax penalty with a coffee habit.

A staggering number of business owners are approaching retirement with a succession plan that consists entirely of vibes. Meanwhile, an enormous wave of small business wealth is about to change hands, whether or not anyone actually planned for it. Here’s what’s actually on the menu:

Sell to an outsider — cleanest exit, most control over deal structure. You get to pick the buyer instead of just accepting whoever shows up.
Pass it to family — emotionally complicated, currently tax-friendly (more below). Proceed with caution and possibly a mediator.
Sell to employees (ESOP) — underused, mostly because almost nobody explains it without putting people to sleep. Newsletter for another week.
Close and liquidate — the default plan when there is no plan, and reliably the worst financial outcome of the four. Congratulations, you’ve chosen violence.

Why 2026 changes the math

The federal estate and gift tax exemption jumped to $15 million per person ($30 million per couple) — and Congress made it permanent instead of letting it halve on schedule like everyone spent 2024 bracing for. Translation: the countdown clock that pushed owners into rushed, sloppy, panic-gifted transfers is gone. You’re now free to plan like an adult instead of like someone who just remembered a deadline exists.

👉 Want to know exactly what counts toward a taxable estate before you assume you’re in the clear? The IRS’s Estate Tax page has the full rundown

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There is more than one way to finance a business.

Most buyers only ever hear about two financing options: get a bank loan, or don’t buy the business. That’s not the full menu. Southern Cross Capital Advisors structures commercial mortgage, SBA lending, working capital, equipment finance, and bridge solutions for deals that move fast or don’t fit a conventional timeline — whether you need help closing the acquisition itself or covering the real estate that comes with it. TaxStache readers get $750 credit toward closing costs.

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THE WEEKLY POLL

When do you plan to retire?

Between 1 and 5 years from now

Between 5 and 10 years

More than 10 years from now

At this point, never

The Strategy

👨‍👩‍👧 Passing the business to your kids with minimal drama

Photo by Age Cymru on Unsplash

The Quick & Bristly: The $15 million exemption means most family transfers won’t owe federal tax at all. The real threat isn’t the IRS — it’s Thanksgiving. A written buy-sell agreement prevents the fight that costs more than any tax bill.

Every family business hits the same crossroads eventually: someone takes over, and someone else finds out they didn’t.

Owners avoid this conversation for years — not because the tax code is scary, but because the people are. At a $15 million exemption, most family businesses can change hands without owing the feds a cent. Throw in the $19,000-per-recipient annual gift exclusion and you can hand off ownership in yearly installments, forever, without touching that number at all. The IRS is fine with this. Your family group chat remains a live grenade.

Two ways to actually do it:

Gift or sell it while you’re alive. Your child takes on your original cost basis, so when they eventually sell, they’ll owe capital gains on every dollar of appreciation since you started the business — garage-era included. What you get in return: the business’s value is frozen outside your estate starting now, and you’re still around to watch them run it (and offer opinions they didn’t ask for).
Leave it to them at death. They inherit at a “stepped-up” basis — current fair market value, not your original cost. Often the more tax-efficient route on paper. Less efficient for you personally, since you won’t be there to enjoy it.

For the more ambitious plans — gifting minority stakes at a valuation discount, or setting up a trust to move future appreciation out of your estate while you keep some control — bring in an estate attorney. This is not a spreadsheet project.

The part the tax code can’t help you with: equity. Not tax equity — family equity. One kid’s been in the business for two decades; the other one hasn’t set foot in it since high school. Split everything down the middle in the will, and you’ve written the invitation to a fight. A buy-sell agreement, put in place while you’re still around to referee, lets the kid who isn’t involved cash out instead of becoming a reluctant co-owner.

👉 Wondering whether that stock transfer to your kid actually counts as a taxable gift? The IRS breaks down exactly what does (and doesn’t) →

The Deep Dive

🏦 Financing to buy a business — where the money actually comes from

Photo by Mike Petrucci on Unsplash

The Quick & Bristly: Most buyers assume the money comes from a bank, get one rejection letter, and give up. There are at least six real ways to fund a business purchase, they’re usually combined rather than used alone, and the interest on nearly all of them is deductible.

The hardest years of any business are the first few, when you’re building everything from nothing and hoping it works. Buying an existing business means someone already survived those years for you. The question isn’t, “Will this work?” — it’s, “How do I pay for it?”

Buying a business you can’t pay for out of pocket isn’t a special skill — almost nobody pays cash. The actual skill is knowing where the money can come from.

Before you go asking:

Pull two years of tax returns and financial statements — yours and the seller’s. Every lender wants this first.
Know your exact number and what it’s for. “Enough to buy the business” isn’t something anyone can underwrite.
Check your own credit ahead of time. Most options below require a personal guarantee.

Where the money actually comes from:

SBA loans: government-guaranteed, up to $10 million, cheaper than most alternatives, but slow (60–90 days) and paperwork-heavy.
Conventional bank loans: faster if you already have a banking relationship and strong financials, but banks want years of clean performance behind the business.
Seller financing: the seller carries part of the price, usually alongside a bank or SBA loan rather than instead of one — and signals they believe in what you’re buying.
Non-bank and alternative lenders: a deeper market than most buyers realize. A bank’s rejection is often the start of the search, not the end of it.
Rollover for Business Startups (ROBS): use retirement funds to buy the business without early-withdrawal penalties. Legal, but the IRS flags these as requiring strict compliance, and your retirement savings are directly at risk — talk to a specialist, don’t DIY it.
Home equity or personal collateral: can fill a gap, but your house is now backing the business. This should be the last piece of the stack, not the foundation.

Whatever combination you use, lenders are checking the same things: cash flow relative to the debt payment (1.25x debt service coverage is a common minimum), collateral, your own money in the deal, and credit history. The stronger those numbers, the more of the list above is actually available to you.

One tax note: interest on nearly all of this is deductible, and how you structure the purchase — assets versus entity — determines what else you can deduct for years afterward, from Section 197 amortization to Section 179 expensing to Form 8594 allocation — covered in more detail in this week’s download.

👉 Curious what a deal would actually cost you? Run your numbers with this business loan calculator →

ALSO PRESENTED BY INC AUTHORITY

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Freebie

📥 The Business Financing Options Worksheet

Photo by Scott Graham on Unsplash

This week’s free download: The Business Financing Options Worksheet

What’s inside:

What’s inside:
- A side-by-side comparison of your three main financing sources
- A deal stack builder — fillable fields to map out your actual purchase: total price, SBA amount, bank loan, seller note, your own cash, and any ROBS or home equity you’re putting in, so you can see whether the pieces actually add up
- A DSCR quick-calculator

📥 Download the Business Financing Options Worksheet

🎧 Listen: Acquiring Minds — “From SBA Loan to High 8-Figure Exit,” the story of a buyer who financed an acquisition with an SBA loan and built it into an eight-figure exit five years later.
🛠️ Use: NerdWallet’s business loan calculator — plug in loan amount, term, and rate to see what a deal actually costs before you sign anything (and before you fall in love with it).
📖 Read: Kiplinger’s “The Entrepreneur’s Exit: How to Sell (or Pass on) Your Business Without Losing the Family “ — useful context from the seller’s side of the table.
📲 Try: See how your business shows up across ChatGPT, Gemini, Claude, and Perplexity — and whether AI is recommending you or your competitor down the street. Free check, no guesswork required. Check your AI visibility free. (sponsored).

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Your kid, your business, and the fight nobody saw coming