Tim Kinane


Interesting Items

Thursday, February 15th, 2018

Your Last Five Years: Why Starting Your Exit Planning is Critical with Only Five Years Left


Imagine a doctor has just advised a patient that he must lose twenty pounds – or his life is in danger. If the doctor said the weight loss must happen within one week, that would be a crisis. If the doctor said the patient must lose the weight within one year, it would take some work, but losing twenty pounds in one year would likely not be a crisis for most people.

In that situation, the key issue is time. The amount of time available to lose the weight determines if it’s a crisis, or a reasonable objective. This means that somewhere between one week and one year is a tipping point, where insufficient time creates a crisis, but sufficient time allows for an achievable goal.

The same is true for planning one’s exit. If a business owner for some reason decided he or she wanted to exit but only had one week to get the job done, that would be a crisis. What if that same business owner allocated not one week but rather one decade to plan for exit? Most people would agree that one decade would be sufficient time to achieve a successful exit. So, between one week and one decade, there is a tipping point. How much time is enough to plan one’s exit properly? Is one year sufficient? How about two years? Three? Five? More than five years?

In our experience, that tipping point occurs at five years prior to exit. Meaning, owners who start seriously planning their exit less than five years before the desired date often find themselves without sufficient time to accomplish all of their exit goals, and/or experience greatly increased cost, risk, and stress. Conversely, owners who start their exit planning five years or more prior to exit are more likely to achieve their goals, at lower cost and with less risk and stress.


Webinar link

Why is five years the tipping point?

Listed below are steps that many businesses and their owners need to take to prepare the company and/or themselves for exit. You will note that most of these items can take several years to accomplish—and that’s only if you get it right the first time. For example, if you need to upgrade your leadership team as part of getting the company ready for sale, one wrong hire can easily set you back a year or longer. Review the list below, and you may recognize a project that you might need to get done to prepare for exit, while you’re still leading and growing your business.

All of the following can take up to five years to accomplish:

Identify, hire, onboard, and align a winning leadership team
Reduce owner dependency down to tolerable levels
Achieve compelling performance against multi-year growth plans
Achieve a multi-year run of strong financial results
Outgrow any customer/client concentration
Build a valuable brand protected in a defensible IP portfolio
Time market conditions to your advantage
Evaluate and implement tax-saving strategies
Realize an ROI on employee incentive plans
Address any co-owner exit misalignment
Design and implement ownership and leadership transfer plans (if exiting to key employees or family)

Any one of these projects can take dozens to perhaps hundreds of hours to fully execute. Yet you and your leadership team still need to keep growing your company, because one of the worst things that can happen is your business fails to grow in the final years before you exit.

So, if you’re saying to yourself that you have about five years before you want to exit – you have reached a tipping point. Every day from here gives you less time to achieve your exit goals. Today is the time to get started to avoid that crisis.


Ready to discuss

Call 772-210-4499  or email Tim to find out more about exit planning solutions.

Ask about our complimentary proprietary tools and checklists. All inquiries are confidential.



Wednesday, February 14th, 2018

The Good, the Bad, and the Unexpected

Good Bad Unexpected

Exit Planning Webinar:

The Good, the Bad, and the Unexpected:
Lessons Learned Exiting from My Business


Feb 27, 2018 @ 2PM – 3PM EST


Webinar Presenter:

Doug Calahan



Enjoy a conversation with Doug Calahan, recognized as a Top 25 Entrepreneur of the Year by Business to Business Magazine, and get a real, honest look at what it is like to sell your business.

Doug will tell us all the things that he wishes he had done differently (as well as some of the things that he thought he did well).

Register now!


This webinar explains how, and covers:

  • How he could (should) have made 50% more on the sale of his company
  • What the stress of selling a company looks like
  • Actions you can begin taking now even if you are not selling for five years

Check out our archive of all past NAVIX exit planning webinars:
Click here to view now


Friday, February 9th, 2018

12 Timely Questions the New Tax Laws Raise for Every Business Owner in America


The Tax Cuts and Jobs Act (TCJA) is perhaps the most sweeping US tax law change in several decades, with a long list of changes to corporate tax rates, personal income tax rates, and other areas. The new laws change much of the tax landscape for businesses and their owners—now and at exit.

Therefore, owners contemplating exit should sit down with their tax, legal, financial, and exit advisors to discuss the new laws and evaluate what steps they must take in this new world.

To aid you, listed below are 12 questions that owners should put to their advisors. We recommend owners print this list and set up a meeting with their advisory team to discuss and review:

12 Questions that Owners Should Put to Their Advisors

Under the new laws, which legal form(g., C-corporation, S-corporation, LLC, partnership, etc.) is most advantageous for our current needs? How about at exit?

Which of themany new and revised tax regulations under TCJAmay NEGATIVELY impact our business? What actions should we consider as a result?

Which of the many new and revised tax regulations under TCJA may POSITIVELY impact our business? What actions should we consider as a result?

Does TCJA contain any provisions that require us to re-evaluate our current: ownership structure, owner compensation practices, capital structure, and equipment purchasing and/or leasing plans?

Given that our likely exit strategy is to one day (Pick one):

□  Sell to an outside buyer
□  Sell to an inside buyer
□  Pass the business down to family
□  Shut the business down

Under the new tax laws, we should:

(Answer with the actionable ideas discussed with your advisor)

Given that our desired exit timeframe is to exit (Pick one): 

  Within next 12 months
  Between one and three years from now
  Between three and five years from now
□  Between five and ten years from now
□  Longer than ten years from now

Under the new tax laws, we should: _________________________________________
(Answer with the actionable ideas discussed with your advisor)

What will my personal income tax picture look like under the new laws? (We recommend modeling them to compare before and after TCJA.)

If the new laws present a significant change (positive or negative) to my personal income tax burden, consequently, what steps should I consider to best achieve my immediate and future financial goals?

Which of the many new and revised tax regulations under TCJA may negatively impact my personal financial planning and picture? What actions should we consider as a result?

Which of the many new and revised tax regulations under TCJA may positively impact my personal financial planning and picture? What actions should we consider as a result?

What changes, if any, should I consider to my personal estate planning as a result of the new tax laws?

What else should I consider doing within my business and my personal financial affairs as a result of the new tax laws that we have not yet discussed?


We encourage you to review these questions with your trusted advisors as soon as possible.


If you would like to review your answers with a NAVIX Consultant,  Call 772-210-4499 or email Tim  for a complimentary 45-minute consultation.


12 questions that Owners Should Put to Their Advisors




Wednesday, February 7th, 2018

Is your company built for long term success?

Each month I share a favorite book review from Readitfor.me.


There is never enough time to read all the latest books – this tool is a great way to learn and to stay on top of the latest topics and new ideas.

If you are like my clients, you work hard learning how to grow your company or organization. You invest the time and money to improve your team for better results and increased value.


How can you build your company for long term success?


Read on…


Built to last

Built To Last

by Jim Collins

Some companies are built to be very successful for a very long time. Jim Collins and Jerry Porras teach us how to do it.

In Built To Last, Jim Collins and Jerry Porras research and explain the characteristics of companies that have massive success over a long period of time.

These companies are:

  • Premier institutions in their industry
  • Widely admired by knowledgable businesspeople
  • Made an significant impact in the world
  • Had multiple generations of CEOs
  • Been through multiple product (or service) life cycles
  • Were founded before 1950

How do we know that these companies are so valuable? They compared these visionary companies with a comparison company that were founded at a similar time and in a similar industry. Think Ford vs GM, or HP vs Texas Instruments. In other words, other solid companies that were better than the general market.

They found that $1 invested in the comparison companies would have returned two times what the general market would have returned. But the visionary companies would have returned fifteen times the general market.

In essence, these companies have something to teach us about what it takes to be very good, for a very long time.

How did they do it? Let’s find out.

Clock Building, Not Time Telling

The authors use the metaphor of building a clock versus telling the time to make the first important distinction between the visionary companies and the comparison companies.

When you are merely telling the time, you are focussed on having a great idea or being a charismatic company leader.

Instead, a clock builder focusses on building a great company that can thrive beyond any product cycle or leader.

Interestingly, few of the great companies in their study can trace their roots back to a great idea or excellent initial product. Some of them began as outright failures.

When Masaru Ibuka founded Sony in 1945, he had no initial product idea. After considering bean-paste soup and miniature golf equipment as two potential first products, they settled on their first product – a rice cooker. It’s first significant product – a tape recorder – failed in the marketplace.

For the visionary companies, a runaway hit product was never the ultimate goal. Creating an enduring company was. As the authors describe it, the shift was in seeing the products as a vehicle to create the company instead of the company as a vehicle to create products.

The builders of the visionary companies were ready to kill or revise a failing product, but were never willing to give up on the company.

Something very interesting happens when you focus on creating an enduring company instead of great products – you realize that you don’t need a high-profile charismatic leader to succeed.

“Tyranny of the OR”

Another interesting thing the authors found was that the visionary companies didn’t seem to make the trade-offs that most companies would make.

Where most companies would make a choice – you can have change OR stability, or low cost OR high quality – the visionary companies would find ways to have both at the same time.

More Than Profits

Visionary companies exist to do more than just make money, where the comparison companies typically don’t.

If you go to business school they’ll teach you that the core purpose of a company is to make money for it’s shareholders. Making money is obviously necessary for a company to survive. Only in Silicon Valley can companies go on for years burning through mountains of cash and still stay in business.

But the visionary companies don’t put profit first – their put their hopes and dreams for what the company can do beyond creating a profit first.

This is what the authors call the core ideology of the company. It is a set of basic precepts that say this is who we are, this is what we stand for, and this is what we are all about.

The core ideology is a combination of core values and purpose.

The core values of a company are the essential and enduring principles that drive all decision making at the company. The Johnson and Johnson Credo is an often cited example (go look it up if you have some time). They remain fixed over time, the bedrock on which the entire company is built.

The purpose of a company is the set of fundamental reasons for the company’s existence beyond just making money. The purpose should be broad, fundamental and enduring. It is something to continuously pursue, not to achieve.

As Walt Disney once said:

Disneyland will never be completed, as long as there is imagination left in the world.

Preserve the Core/Stimulate Progress

Thomas J. Watson, Jr., the son of IBM’s founder and the 2nd president of the company, sums up what the authors are getting at in this section of the book when we says:

“If an organization is to meet the challenges of a changing world, it must be prepared to change everything about itself except its basic beliefs as it moves through corporate life…The only sacred cow in an organization should be its basic philosophy of doing business.”

Preserving the core while stimulating progress is the central concept of this book.

Stimulating progress in the visionary companies is an internal drive, not an external one. They don’t wait for the market to tell them it’s time to improve. They feel compelled to do it on their own – like a great artist feels compelled to create.

The trick is to have a firm understanding of what your core actually is. Most companies in the comparison group mistake strategies and tactics for their core, and thus don’t change their strategies and tactics readily enough.

Unfortunately, that also allows them to drift from their core purpose, leading to the double whammy of a rudderless company fixated on tactics and strategies that will eventually stop working.

Now that we’ve got the core idea of the book nailed down, it’s time to move onto the five categories of preserving the core and stimulating progress you can use to become a visionary company.

Big Hairy Audacious Goals (BHAGs)

Although I have a natural fear of things that are big and hairy, I’m willing to make an exception here.

BHAGs are commitments to challenging and often risky goals toward which a visionary company channels its efforts.

It’s the difference between having a good old regular goal, to becoming committed to a huge and daunting challenge. The most often quoted BHAG of all-time is when Kennedy told the world the US would land a man on the moon before the end of the 1960s were up.

In order to work, the BHAG needs to be clear and compelling. Your people need to “get it” right away – it should take little or no explanation.

GEs goal in the 1980s fit the bill. Their goal was to “Become #1 or #2 in every market we serve and revolutionize this company to have the speed and agility of a small enterprise.”

When you read your BHAG, there should be some part of you that tells you that you’ve set yourself an unreasonable goal. But there should be another part of you that tells you that you can do it anyways.

People outside your organization will think (and sometimes tell you right to your face) that you are crazy.

But when you set it right, it will galvanize the energy of your entire company towards achieving it.

Cult-like Cultures

The visionary companies build a culture that is a great place to work only for those who buy in to the core ideology. Those who don’t fit in with it are ejected like a virus, which helps to preserve the core.

That’s because when you are very clear about what you stand for, and very clear about where you are heading (someplace amazing and scary at the same time), you tend to be more demanding of your people.

This causes some people to compare these types of companies to cults. In fact, as the authors point out, they do share at least four characteristics with them.

  • a fervently held ideology
  • indoctrination
  • tightness of fit
  • elitism

When you show up to a visionary company, you are going to be reminded of your purpose and BHAG on a regular basis. You’ll be rewarded in many ways if you become a permanent part of the team. And you’ll feel a sense of elitism because out of all of your friends, you’ll be the only one working on a mission greater than earning a paycheque.

To make the comparison complete, the people around you will probably accuse you of “drinking the Cool-Aid.”

But that’s ok – that’s what it takes to become a visionary company.

One last point on this topic – this is NOT about creating a cult of personality – this is about creating a cult of purpose and mission.

Try a Lot of Stuff and Keep What Works

To me, this sounds an awful lot like what people today would call the Lean Startup method. Or at least the beginnings of it.

In visionary companies we see high levels of action and experimentation – often planned and undirected – that produce new and unexpected paths of progress that enable visionary companies to mimic the biological evolution of species.

As Richard Carlton, the former CEO of 3M once said:

“Our company has, indeed, stumbled onto some of its new products. But never forget that you can only stumble if you are moving.”

Many of the visionary companies made transitions from one market to another not because of detailed strategic planning, but by experimentation, opportunism, and sometimes by accident.

American Express started off as a freight business in 1850. One of the things they originally shipped was cold hard cash (think of a Brinks truck today and you get the idea). The creation of money orders forced a decline in demand for their cash shipping service, so they created their own money order, which they called the “Express Money Order.” That started their transformation into the financial juggernaut we know today.

Each of the visionary companies exhibited this kind of behaviour. 3M famously created the Post-It note as a failed experiment into a permanent adhesive, which one of their engineers used to mark pages in his church hymnal. The rest, as they say, is history.

If you want to create a culture where evolutionary progress takes hold, start with these five principles.

  1. Give it a try—and quick!. Try new things, adjust to what you find, and for heaven’s sake, keep moving.
  2. Accept that mistakes will be made. The nature of experimentation is that you don’t know what you’ll find. So some things will work, and others won’t. Accept that mistakes will be part of the process.
  3. Take small steps. Small steps serve two purposes. First, any small mistake won’t sink the company. Second, many small steps put together are what it takes to make real progress.
  4. Give people the room they need. Give your people the latitude to try new things.
  5. Build the clock. Turn the previous four steps into something that becomes part of your culture.

Home-grown Management

In visionary companies we see a lot more promotion from within the company, which means that the senior management is always filled with people who’ve spend a significant amount of time immersed in the core ideology of the company.

This one is pretty straight-forward and doesn’t require much more explanation.

Just remember that you need to have a management development process and long-term succession planning in place to ensure a smooth transition from one generation to the next.

If you are doing a good job of developing talent internally and keeping them indoctrinated in your core purpose, you should have no problem finding your next great executive from your ranks.

Good Enough Never Is

In the visionary companies, we see a “continual process of relentless self-improvement with the aim of doing better and better, forever into the future.”

The critical question for each of the visionary companies is not “how are we doing compared to our competition?”, it is “how can we do better tomorrow than we did today.”

In fact, visionary companies will go to great lengths to ensure that they create discomfort so that they can create change before the external world demands it.

As an example, in the early 1930s, P&G already had the best products, the best people, and the best marketing. So they designed a brand management structure that allowed P&G brands to compete directly with other P&G brands.

In each of the visionary companies the authors found some sort of discomfort mechanisms to combat complacency – which is something that the best in any field have to combat.

Boeing had a practice they called “eyes of the enemy”, where they assigned managers the tasks of coming up with business plans with the sole purpose of destroying Boeing. Then they would come up with plans to respond to those (imagined, but very real) threats.

The goal for the visionary companies is to ensure the long-term health of the company, which requires constant investment into the future. This includes when times are good, and when times are bad. Long-term health is never sacrificed in the name of short-term profits.


Interestingly, much of what was written about these Built To Last companies is coming back into fashion about 35 years later.

What I want to suggest is that these principles were once required if you wanted to build a great and enduring company. These days, it seems as though you need to follow these principles if you merely want to survive.


Companies with long term success have strong teams.

Our Team Strength tools help companies maintain the focus on developing the most successful teams. When there is a need for an infusion of talent we use a Team approach in the selection process for those new employees.

By enlisting the help of existing team members, we efficiently identify qualified candidates while also determining their values and fit to the culture of the organization.  As a result, in 60% of our engagements our clients have identified and hired two candidates for each available position.

Tim Kinane

Call 772-210-4499  or email to set up a time to talk about tools and strategies to lead to better results.

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Friday, February 2nd, 2018

Exit Planning Under the New Tax Laws: Should You Be a C-Corporation?



While there are many material differences between C-corporations and other legal forms, for this purpose the most important tax difference is that C-corporations pay taxes on income, whereas the other commonly used legal forms are pass-through entities, which mean taxable income (or losses) “pass-through” to the owners’ personal income tax returns. This difference is relevant because, despite the much-hyped tax cut, owners of C-corporations still face under the new tax laws the risk of double-taxation when they sell the company. If double-taxation sounds bad, that’s because it usually is.

Here’s what double-taxation means, and why it occurs. When corporations are sold, the buyer has a choice to make. Does the buyer want to purchase the corporation’s stock from whomever or whatever owns it, or does the buyer want to purchase the company’s assets from the corporation itself? The two options are thus called stock sales (a.k.a. entity sales) and asset sales. Buyers overwhelmingly prefer asset sales, for two main reasons. First, stock sales increase potential risk to buyers, because if they buy the stock, they may inherit future liabilities attached to that stock, whether known or unknown at the time of sale. The second reason buyers overwhelmingly prefer asset sales is because asset sales typically are more attractive to the buyer financially. In an asset sale, the buyer gets to depreciate on its tax return some assets faster than it commonly would be able with a stock sale. For these two reasons, buyers prefer asset sales.


Buyers asset sale


Are you familiar with the adage that says in any negotiation between two parties where one has all of the money, and the other does not, the one with the money wins? Well, the adage applies here. The buyers have the money. So, more often than not, buyers get their way and require asset sales. (There is even a provision of the tax code called Section 338(h)(10) that lets buyers treat the sale as if it were an asset sale for tax purposes, even though structurally the transaction was a stock sale. This is called a deemed asset sale.)

So that means if you intend to sell your company one day, the future sale most likely will be an asset sale. That’s when double-taxation kicks in. First, the buyer purchases from the corporation its assets. At that point, a C-corporation now has to pay any taxes owed from the sale of its assets. Let’s create a simple example. Assume a $10 million asset purchase price, and the company pays exactly 21% in taxes, which is $2.1 million.


Sale compare


Once the dust has settled, the seller is now left with an empty C-corporation, other than the $7.9 million in after-tax cash from the sale proceeds sitting in the company’s bank account. At that point, the seller wants to take money home thank-you-very-much, and so distributes the money out to the owner(s). That triggers the second tax. Let’s assume that second tax is all long-term capital gains taxes at 20%, plus the 3.8% Net Investment Income Tax that usually applies. So now that’s another $1.88 million in personal taxes ($7.9 million X .238) as shown below. Put the two levels of tax together, and the total taxes paid at sale are about $3.98 million on the original $10 million sale.


Sale compare 2


The double-taxation creates almost a 40% total tax burden—and this example does not include any state or local taxes, which would only add to the total. So, even though the C-corporation tax rate is reduced, if you intend to sell your company one day to an outside buyer, it remains highly disadvantageous to sell your business while a C-corporation in most situations.

One last important point to remember: If you have a company that is a C-corporation that you expect to sell, and to avoid double-taxation you usually would convert that C-corporation into an S-corporation. However, you must outwait that conversion by five years to eliminate all risk of double-taxation at sale. This arcane tax provision is called the Built In Gains tax—yes, the BIG tax. We can’t make this stuff up.

Operating as a C-corporation may only be advantageous if you are confident that you will not sell the company for any reason within the next five years, or if you never intend to sell your business but instead you give it to family members in the future. All of this reinforces that business owners need to think through their exit and plan ahead on tax questions, many years prior to exit.


This information is for educational purposes only. Please consult your tax, legal, and other advisors to evaluate how this material may apply to you and your businesses. NAVIX does not provide tax or legal advice nor services.


Ready to discussCall 772-210-4499  or email Tim to find out more about exit planning solutions.


Ask about our complimentary proprietary tools and checklists. All inquiries are confidential.

Thursday, January 18th, 2018

Passing Your Business to Family: Exit Planning Under the New Tax Laws



If your exit strategy is to one day pass your business down to one or more of your family members, which we call following a “Passer” exit strategy, then the new tax laws effective January 1, 2018, present a radically changed landscape for your exit planning.1 Business owners who are Passers and intend to keep the business within the family need to know what the new laws include, and how to best achieve your exit goals now that the rules have changed.

The Tax Cuts and Jobs Act (TCJA) is perhaps the most sweeping US tax law change in several decades, with a long list of changes to corporate tax rates, personal income tax rates, and other areas. However, it is how TCJA has changed estate and gift taxes that presents the biggest news for owners who may be Passers. The reason why Passers must pay special attention to estate/gift/generation-skipping taxes is that these taxes often present the greatest potential cost and obstacle to transferring the business down to the next generation.2

For Passers, TCJA presents good news—somewhat.

The biggest potential good news for Passers under TCJA is that the number of assets that can be sheltered from estate/gift/generation-skipping taxes has doubled, from about $5.5 million per eligible taxpayer to about $11 million per taxpayer starting in 2018. If married, that means an eligible couple can now shelter about $22 million in total assets from estate/gift/generation-skipping taxes. For business owners seeking to one day pass the business down to the kids (or other family members) for low to no taxes, this is huge news. As long as your interest in your business is potentially worth less than $22 million, under TCJA, you can pass the business for zero taxes. If your business interest is worth more than $22 million, you still get the first $22 million of asset transfers tax-free, and then work with your tax and legal advisors to consider additional strategies to address the taxes that may be triggered above the $22 million thresholds. (The top estate/gift/generation-skipping tax rate remains 40% under TCJA.)

“What Congress giveth, Congress taketh away too.”

It would be helpful if the story stopped right there, however, what Congress giveth, Congress can taketh away too. The tax law change that doubles the amount you can shelter from estate/gift/generation-skipping taxes expires on December 31 st , 2025. After then, unless Congress takes new action, the amount you can shelter from these taxes reverts to the pre-TCJA amounts. That presents both an opportunity and challenge for Passers. It means you have only eight years from when the law kicks in to take advantage of it before the old limits re-apply. Eight years from the time of this writing may seem like a long time, but there is a lot to take into consideration when passing a business down to the kids or other heirs:

  • Are you ready to give up control?
  • Are the kids ready to run the business? If not, will they be old enough and ready in time?
  • How will you make sure you have sufficient assets and income to achieve your personal financial goals, once the business has passed to the next generation?
  • Do you have kids who are not working in the business? If yes, how do you treat them fairly without splitting up the company?

These are just some of the questions many Passers face, and now there is a countdown clock ticking down that puts pressure on Passers to figure out the answers before the end of 2025.

Put this all together, and it means if you are a Passer, it’s time to get started on your exit planning. Or if you have started already, you’ll likely need to conduct a thorough review of your exit plans because the rules of the game have changed—at least for a while. Meet with your exit, tax, and legal advisors to discuss how to achieve your exit goals under these new tax laws.


Call 772-210-4499  or email Tim to find out more about exit planning solutions.

Ask about our complimentary proprietary tools and checklists. All inquiries are confidential.



  1. There are only four possible exit strategies. If your intended exit strategy is to pass your business down to a family member, we call this being a “Passer”. Call Tim to learn about the three other exit strategies, and to help discern which may apply to your situation.
  2. For a full discussion how these taxes work and impact business owners, order a copy of Dance in the End Zone: The Business Owner’s Exit Planning Playbook™by Patrick Ungashick.

Wednesday, January 17th, 2018

Exit Planning Under the New Tax Laws


While the Tax Cuts and Jobs Act (TCJA) impacts every corner of the US economy and everyone it in, the new law impacts business owners perhaps more than anybody. The new law also reshapes how owners must approach their exit planning.

Exit Planning Under the New Tax Laws Webinar
Jan 23, 2018 @ 2PM – 3PM EST


Register now

Webinar presenters 1 23 2018


Register now!


This webinar explains how, and covers:

  • How the new laws change old assumptions
  • Issues business owners must consider under these new rules
  • Key provisions of TCJA

Check out our archive of all past NAVIX exit planning webinars:
Click here to view now




Thursday, January 11th, 2018

Pursuing Financial Freedom Under the New Tax Laws


For most business owners, the number one goal to achieve at exit is to reach financial freedom. (We define financial freedom as reaching a level of wealth where work is a choice, not a necessity.) However, business owners face a number of costs in their pursuit of financial freedom, the greatest of which usually is income taxes. With the US Congress and President Trump enacting into law on December 22, 2017, the Tax Cuts and Jobs Act (TCJA), business owners seeking to achieve financial freedom at exit now have a vastly changed tax landscape to work within. And while the headlines all seem to indicate that TCJA reduces income taxes across the board, the truth is more complicated…

To start, US federal income tax rates have been reduced under TCJA. The top rate is reduced from 39.6% down to 37%, and most of the other rates in the seven brackets are reduced as well. Additionally, income required to cross over into the next marginal rate is now substantially higher, further reducing potential taxes. For example, the chart below compares the new rates under TCJA to the old rates for US taxpayers who are married and file jointly.


Sample Tax Rate Changes


There are other potentially positive changes under the new tax laws as well. To point out a few highlights that may apply to business owners seeking financial freedom:

  • C-corporation income tax rates have been permanently reduced from 35% to 21%.
  • Certain “pass-through” entities, most commonly S-corporations and LLCs, may be eligible for a 20% federal income tax deduction in some situations. Because this new provision of the tax code has the potential for causing significant confusion, we will be hosting a free webinar for business owners on TCJA and how it impacts their exit planning Register today.
  • Alternative Minimum Tax (AMT) has been repealed for C-corporations, and exemption amounts increased for personal income taxpayers.

If the story stopped there, it would be all good news. However, Congress giveth, and Congress taketh away too. There are some additional changes to the tax code that may negatively impact certain taxpayers, especially higher net worth and/or higher income business owners. For example, two new provisions likely to negatively impact successful business owners are:

  • TCJA limits personal state and local tax deduction to a combined $10,000 for income, sales, and property taxes. This provision will hit hardest taxpayers who live in high-income tax rate states (such as California and New York), and/or taxpayers who own a larger amount of property and pay a more considerable amount of property taxes.
  • For primary and secondary residences bought Dec. 15, 2017, or later, you now may deduct the interest you pay on mortgage debt up to $750,000, down from $1 million. Again, business owners with mortgages on first and second homes may face higher taxes under this provision.

TCJA contains dozens of additional provisions that, depending on your circumstances, may reduce or increase your tax bill. Frustratingly, there is one other aspect to the new tax laws that every business owner must understand—most of the personal and pass-through income tax reductions automatically expire (“sunset”) after 2025. This frustrates and complicates planning for financial freedom because owners now must make sure that their financial modeling and analysis accounts for these changes to revert to the pre-2018 rules.

Put this all together, and the most important conclusion is business owners need to sit down and recalculate their plan and path to reach financial freedom. Taxes are likely the number one cost you will pay as you monetize your company and build personal wealth. With the myriad of changes brought by TCJA, old assumptions no longer apply. At NAVIX, we call the process of planning for financial freedom calculating your Exit Magic Number™. To learn more about our approach, download the Exit Magic Number™ eBook.

Now that we have these new tax rules in place, it’s probably time to get started.

Call 772-210-4499  or email Tim to find out more about exit planning solutions.

Ask about our complimentary proprietary tools and checklists. All inquiries are confidential.

Thursday, January 4th, 2018

Special Alert: The New Tax Laws and How They Impact Business Owners and Exit Planning





On December 22, 2017, President Trump signed into law the Tax Cut and Jobs Act (TCJA), the biggest reform to US taxes in several decades. The tax changes impact every corner of the economy, and every American taxpayer and business. Over the next few weeks, we will summarize important information about the major provisions of the new tax laws, and how they may impact business owners and their preparations for exit. The highlight of our analysis will be an in-depth webinar about exit planning under the new tax laws, to be broadcast on Tuesday, January 23rd at 2:00 pm ET.

Click here to register for our upcoming Exit Planning Under the New Tax Laws webinar.


But first, here is a summary of the major provisions of TCJA:


Selected Changes Impacting Businesses

  • C-corporation income tax rates are permanently cut from 35% to 21% starting in 2018. This represents the largest one-time reduction in corporate tax rates in US history.
  • The Alternative Minimum Tax (AMT) for C-corporations is eliminated.
  • “Pass through” companies (typically S-corporations and LLCs) can now deduct 20% of certain types of non-salary business income, bringing the top marginal tax rate down from 39.6% under current law to 29.6%. Specific service industries, such as health, law, and professional services, with income over $315,000 (married filing jointly) are excluded. This provision expires after 2025.
  • Full and immediate expensing of short-lived capital investments for five years. Increases the Section 179 cap from $500,000 to $1 million.
  • The current unlimited deduction for net interest expense for C-corporations is capped at 30% of earnings before interest and taxes. For the first four years, the cap applies to 30% of EBITDA. Thereafter, the cap is applied to EBIT.
  • Eliminates net operating loss carrybacks and limits carryforwards to 80% of taxable income.

Webinar link

Selected Changes Impacting Individuals

  • Income tax brackets and rates have been lowered. There will still be seven brackets, but their cutoff points will be lower: 10, 12, 22, 24, 32, 35, and 37%.
  • An increase in the standard deduction. Single filers will get a $12,000 deduction; heads of household, $18,000; and joint filers, $24,000. The personal exemption, though, has been discontinued. These provisions sunset in 2025.
  • Property taxes, sales tax, and/or state/local income taxes paid are now limited to a combined $10,000 deduction per year.
  • Mortgage interest deduction lowered. This deduction, which can be applied to the acquisition of either first or second homes, is limited to a debt of $750,000. Interest on HELOC loans will not be deductible. For those who have existing loans, the current $1,000,000 cap is retained.
  • Expanded use of 529 education savings plans. Taxpayers can now distribute up to $10,000 per year from 529 accounts for K-12 private schools and to help with homeschooling costs.
  • Estate tax lifetime exemption amount has doubled to about $11 million per eligible taxpayer, and therefore $22 million for married couples.

These are just some of the changes included in this sweeping tax reform. For the next few weeks, we will provide additional analysis of the new tax laws, and discuss how they impact business owners and exit planning. To receive timely news and articles on exit planning, subscribe now to our weekly Exit Playbook™ Blog.



Disclaimer – This article is for educational purposes and does not constitute tax advice. Readers should consult their tax advisor to evaluate this information and determine how it may apply in their situation.

Tuesday, December 26th, 2017

Do you achieve the goals you set?    Does your team?

Each month I share a favorite book review from Readitfor.me.

There is never enough time to read all the latest books – this tool is a great way to learn and to stay on top of the latest topics and new ideas.

If you are like my clients, you work hard learning how to grow your company or organization. You invest the time and money to improve your team for better results and increased value.

Do we really know what our goals are and are they set properly?

Read on.


by Heidi Grant Halvorson




I’m sure like me you’ve probably set many goals, in business and in personal life and, unfortunately not quite achieved them.  Well, in her book, “Succeed: How We Can Reach our Goals”, Dr Heidi Grant Halvorson tells us anyone can be more successful in reaching their goals. Based on the findings of several years of research into goal setting she clears the mist and shows us paths we can take to finally reach these goals.

It all starts with Self Control.

Halvorson asks us to think back to the achievements in our own life—the ones we are most proud of.   In all cases she claims – quite rightly – that we will have worked hard, persisted despite difficulty, and stayed focused, when it would have been much easier to just relax and not bother.

What we used was self-control –  the ability to guide our actions in pursuit of our goal and to avoid temptation, distraction and other demands.  Halvorson suggests self-control is much like a muscle. We need to work it, train it and not strain it.

Self-control is learned and developed and made stronger or weaker over time. If you want more self-control, you can get more. And you get more self-control the same way you get bigger muscles—you’ve got to give it regular workouts.

Why or What?

Do we really know what our goals are and are they set properly?  Halverson suggests not. She suggests we are often not specific enough – and in the absence of a specific goal and in the wrong context we are doomed to fail.

Halvorson suggests when actions are difficult to accomplish, we will find it is easier and much more helpful to think in simple, concrete ”WHAT” terms rather than lofty, more abstract “WHY” ones.  What we want to achieve rather than why we want to achieve it.  We should forget about the bigger picture and focus on the task at hand.

However, when we think “WHY” rather than “WHAT” we are less vulnerable to temptation and more likely to take better control. So, since both the “big picture” WHY and “nitty-gritty” WHAT modes of thinking have their advantages and disadvantages, Halvorson suggests the best strategy is to shift our thinking style to match the goal we want to achieve.

She suggests for long term high level goals we should think “WHY” and for short term objectives we need to be more concrete and think “WHAT”. WHY thinking leads us to pay more attention to what Halvorson and her fellow psychologists call desirability information. In other words, how fun, pleasant, or rewarding will it be?

More concrete, WHAT thinking leads us to place more weight on feasibility information—whether or not we can actually do whatever needs to be done. How likely are we to succeed? Halvorson declares people who think achieving their goal will be hard plan more, put in more effort, and take more action in pursuit of their goals.

On the other hand she suggests people who think that reaching their goal will be easy aren’t prepared for what lies ahead of them, and can be devastated when their dreams don’t actually come true.

Consequently, she suggests the optimal strategy to use when setting a goal seems to be to think positively about how things will feel when you achieve your goal, while thinking realistically about what it will take to get there.

When we are thinking about taking on a new goal, we must also think about the obstacles that stand in our way.

The Wonderful Thing about Triggers

Halvorson asks: What aspects of our environment can trigger the unconscious pursuit of a goal?

In short she tells us that just about anything can unconsciously affect our commitment to a goal: works, images, sounds, anything related to the goal can act as a trigger. Maybe now those “motivational” posters you see everywhere seem a little less silly, right?

Halvorson discloses that studies have shown that the mere presence of something that can help you achieve your goal can trigger it. Walking past the gym can trigger the goal of wanting to work out in it. So how can we influence our unconscious?

Halvorson gives us the following tips:

Align the cues you create to your own lens

Know what is influencing you.

Know what you believe about your abilities.

Set up the right environment.

Good or Better?

Halvorson and her psychologist colleagues refer to the desire to show that we are smart or talented or capable as having a performance goal. When we pursue performance goals, our energy is directed at achieving a particular outcome—like getting an A on a test or reaching a sales target. We choose these goals because we think reaching them will give us a sense of validation and then we judge ourselves according to whether or not we are successful.

On the other hand, the to the desire to get better and enhance our skills is a mastery goal. When people pursue mastery goals, they don’t judge themselves as much by whether they achieve a particular outcome. Instead, they judge themselves in terms of the progress they are making. These goals are about self-improvement rather than self-validation about becoming the best you can be rather than proving you are.

So which is best?

Halvorson says when we are focused on getting better, rather than on being good, we benefit in two very important ways.

First, when things get tough we don’t get so discouraged.

Second, when we start to have doubts about how well we are doing, we are more likely to stay motivated because we can still learn. So if we choose get-better goals, we have greater success because we enjoy the process of getting better.

If we focus on growth instead of validation, we are less likely to get depressed because we won’t see setbacks and failures as reflecting our own self-worth and we are less likely to stay depressed, because feeling bad makes us want to work harder and keep striving.

Promotion or Prevention?

Halvorson tells us of another complementary pair of goal definitions.

When we pursue a promotion goal we are trying to gain something. When it’s about gain, we are going to be motivated both by high value and a high likelihood of success. In fact, the more valuable the goal, the more we care about our chances of success.

But when we are pursuing a prevention goal, we are trying to avoid a loss. It’s about being safe and avoiding danger. A high-value prevention goal is one where safety really matters and where failure is particularly dangerous. So the more valuable the goal, the more we see reaching it as a necessity.

Halvorson states to be optimistic is valuable, particularly in pursuit of achievements – promotion goals. Realism, on the other hand, is invaluable in pursuit of security or avoiding disastrous losses – prevention goals.

Making goals our own.

The greatest motivation and most personal satisfaction we achieve are from those goals that we choose for ourselves. Research has shown that when people feel they have choices, and that they are an integral part of creating their own destiny, they are more motivated and successful.

Providing a feeling of choice and acknowledging people’s inner experience shifts their sense of control back to them and makes them feel like they are in charge of their own actions. From her research, Halvorson states that it isn’t so much actual freedom of choice that matters but the feeling of choice. Choice provides a sense of self-determination, even when choice is inconsequential or imagined.

if a goal is internalized, we get increased motivation, better performance, enjoyment and an increased desire to work. We also avoid the hassle of having to provide controls or incentives to bring about the behaviour we are after.

Bringing it all together.

Here are a few strategies the author suggests we follow when we have established the lens of our goal.

Halvorson advises us when achieving our goal means doing something easy, straightforward, or familiar, we are probably better off focusing on a be good, performance goal.

But what if they are not so easy?

Halvorson says we can benefit from changing our thinking from why to what. Literal what-do-I-need-to-do-to-reach-this-goal thinking is enormously helpful when we are pursuing challenging goals.

What about the distraction of doing something else?  Overcoming temptation is hard. It usually requires a lot of self-control. Halvorson advises this is another situation where it pays to think of our goals in terms of why rather than what. Giving our goal a prevention focus is also an excellent way to beef up our resistance.

What if we need to get something done quickly?

Halvorson’s answer is a simple one although the task may not be—give our goal a promotion focus.

Which kinds of goals work best when we want to be inspired?

Halvorson suggests giving our goal a promotion focus can heighten our creative powers. So, too, can goals that are of our own making—goals that fulfil our basic need for autonomy. In general, goals that are autonomously chosen are much more interesting and enjoyable to pursue than those that are chosen for us.

What if we want to have fun along the way?

Halvorson tells us to try focusing on getting better, rather than on being good.

Be Prepared Redux

Ok, so now we know how to identify and set our goals appropriately.  But beware, it’s still not smooth sailing.  There are still barriers to overcome.

Halvorson suggests there are plenty of different mistakes we can make, but the one most frequently responsible for our troubles is that we miss opportunities to act in a timely manner.  We are regularly given, whether we notice or not, opportunities to act on our goals. But in most cases when one arises, we chose to do something else.

Halvorson makes it clear that there is no strategy more effective for fighting off these goal blocking situations than making an If-Then plan.

Simply put when you find yourself in a situation (IF) then you carry out a goal attaining action (THEN).

For example: If I’m watching TV then I’ll sit up straight to help my posture. If it’s Monday morning, I’ll go to the gym before work to get fitter. If I’ve had a large lunch, I’ll have salad for dinner.

So it’s back to self-control.

Halvorson suggests we use the acronym H.A.L.T. to remind ourselves of circumstances where our self-control may drop: Hungry, Angry, Lonely, Tired.  In each of these situations self-control is threatened so what do we do?

Halvorson tells us to resist. If we reach for the comfort food or activity it’s hard to get back on the wagon.  Stopping before we start is an excellent strategy to keep our need for self-control to a minimum.

Secondly, she tells us to focus on how well we’ve been doing and to consider just how much an effect on that progress, falling off the wagon would be.

Thirdly, she says, whatever we do, don’t try to pursue two goals at once that both require a lot of self-control. In these situations it’s hard to decide which to do and consequently we are likely not to do either.

Finally, here’s her one last strategy for overcoming a total loss of willpower: we should reward ourselves for being good. After all, a reward celebrates success and success is a goal we are after, isn’t it?


Do we really know what our goals are and are they set properly?  What goals have you set for yourself, your company, your team?

Tim Kinane

Call 772-210-4499  or email to set up a time to talk about tools and strategies to lead to better results.

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