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Ask Dave

Profit From Restaurant Sale...Now What?

Now that Paul's sold one of his restaurants in his Sub S Corporation, Dave walks him through the next few steps.

QUESTION: Paul and his wife have a restaurant business in a Sub S Corporation.  He sold one of the restaurants to get debt free and now has some profit that he’s sitting on.  What can he do with that?

ANSWER: First of all, you’re going to pay taxes on this money because a Sub S Corp is treated like a sole proprietorship for tax purposes.  Make sure you set enough money aside for the taxes.

Then, make sure you’re debt free personally and in your business.

Next, you need a business emergency fund for any emergencies and even for some operational expenses.  Having an extra-padded emergency fund will give you peace of mind knowing that you’ll always make payroll and it will give you the ability to buy equipment for pennies on the dollar because you have the cash on hand.  It’s not a bad idea to have a giant business emergency fund in an interest-baring money market account.

If you’ve taken all of those steps, you need to invest whatever is left in good growth stock mutual funds.