A worked example
Buying a business on a seller note
Jesse, 40, single, left a $300k corporate job to buy a $900k-revenue business for $800k — 10% down, the seller carrying $720k at 8% over ten years. The business earns $350k before paying Jesse anything.
“If I pay myself $150k, does this beat the job I left — and what does the note cost me along the way?”
What the projection shows
The tax on business profit lands whether or not the profit is drawn, so the two plans differ in what funds the household: the year the pre-tax accounts are exhausted, the first year the household comes up short, and the interest and principal split of the note in every year.
What else the projection found
Nothing here was left blank. These follow from the figures above, under the assumptions this example states.
- The business earned $254,904 and paid $150,000, so $104,904 is taxed to you but never reached you. The year's $71,758 tax bill takes $44,758 out of personal accounts.
- The business earned $350,000 and paid $225,000, so $125,000 is taxed to you but never reached you. The year's $110,029 tax bill takes $58,825 out of personal accounts.
The planner arrives with this household already filled in. Change anything — the balances, the ages, the assumptions — and run it as yourself.
A projection under stated assumptions, not financial or tax advice.