Here is the short answer. After you close, do three things in this order: set aside the tax on your gain, park the rest somewhere safe while you plan, and build a written plan before you invest a dollar. Almost everything else can wait.
The harder shift is often personal. For years the business set your schedule, your income, and much of your identity, and then a wire arrives and that structure is gone. That reaction is normal, and it is a reason to move deliberately, not quickly. If you are still before closing, our guide to how to invest business sale proceeds /tax-planning-for-business-owners-approaching-a-liquidity-event-in-ohio covers what to do ahead of the LOI.
Six moves cover the transition:
1. Set aside the tax on your gain
2. Park the proceeds while you plan
3. Map your escrow and earnout timing
4. Move beyond the single-asset mindset
5. Do the income replacement math
6. Use the gain year for estate and charitable moves
| Phase | Key Decisions | Common Mistakes |
|---|---|---|
| First 30 days | Calculate and reserve the tax. Mark the next estimated payment date. Park proceeds in Treasuries or insured cash. Log every escrow and earnout release date. | Spending or investing before the tax is reserved. Treating escrowed dollars as spendable. Saying yes to the first product pitch. |
| 3 to 6 months | Write the plan: spending, income replacement, risk, and goals. Assemble your CPA, attorney, and fiduciary advisor. Update estate documents. Begin diversifying in stages. | Investing from a pitch instead of a plan. Re-concentrating in one new bet. Forgetting health coverage the business used to provide. |
| Year 1 | Complete gain-year charitable and gifting moves by December 31. Keep estimated payments on track. Review the plan at each escrow release. Set a spending policy. | Missing the year-end deadline. Underpaying estimates. Lifestyle creep. Never revisiting the plan. |
Table 1: What to decide, and what to avoid, in each phase after closing. Timing is measured from your closing date.
Step 1: Set Aside the Tax on Your Gain
Closing does not withhold tax for you, so the bill is yours to reserve. As a placeholder, hold back roughly 25% to 30% of the gain until your CPA runs the numbers. Federal tax on long-term gain can reach 23.8%,1 and Ohio taxes nonbusiness income at 2.75%, with business income above $250,000 taxed at 3%.2
Estimated payments are due April 15, June 15, September 15, and January 15. To avoid a federal penalty, you generally need to pay the smaller of 90% of this year's tax or 100% of last year's, which rises to 110% if your prior-year income was above $150,000.3 Ohio uses 90% of current-year or 100% of prior-year tax.4 Those safe harbors prevent penalties, not the bill itself, so the balance is still due when you file. If you close this fall, your next payment date is January 15, 2027. If the gain landed late in the year, ask your CPA about the annualized income method, which can shrink earlier installments.3
Step 2: Park the Proceeds While You Plan
Nothing about the rest of your money is urgent, so give it a safe, boring home. Treasury bills, Treasury money market funds, and insured cash held within limits at each bank all work. Interest on U.S. Treasury obligations is exempt from Ohio income tax, though it is still taxable federally.5
The mistake here is momentum. Once word spreads, bankers, brokers, and friends with opportunities will all have an idea. Treat every pitch as information, not a deadline. Parking buys you time to answer the question that matters first: what do you want this money to do?
Step 3: Map Your Escrow and Earnout Timing
Part of your price may not arrive at closing. In private deals, escrows commonly hold 5% to 15% of the price for 12 to 18 months.6 On a $10 million sale, that can mean $1 million or more you cannot touch for a year or longer.
Treat escrowed and earnout dollars as a separate bucket with release dates, and do not count them in your spending plan. Whether escrowed dollars are taxed at closing or at release depends on how the agreement is written, so ask your CPA before you size your tax reserve. If an earnout depends on your staying employed, it can be taxed as compensation at ordinary rates instead of as sale proceeds.7 Build a calendar of every release, the tax it triggers, and the risk that it is reduced by a buyer claim.
Step 4: Move Beyond the Single-Asset Mindset
You spent years holding one concentrated asset that you controlled, and its returns came from your effort. Now you own a portfolio you do not control, and effort no longer moves the result. The adjustment is real: diversification can feel like a loss of control, and sitting in cash can feel like drifting.
The usual mistake is to re-concentrate: another operating business, one real estate market, a friend's startup. Those can have a place, but a written plan should set how much of your wealth any single bet can hold. Your plan, not your instincts as an operator, should decide how and how fast you move out of cash.
Step 5: Do the Income Replacement Math
Start with what is actually left: proceeds minus tax, debts, escrow, and a cash reserve. Then compare what that supports with what the business used to pay you in salary, distributions, and personal expenses it covered, such as vehicles and insurance.
Morningstar's 2026 research puts the highest safe starting withdrawal rate at 3.9% for a 30-year horizon with a 90% chance of money remaining.8 If $6 million is left after tax and escrow, that supports about $234,000 a year before tax on the income. If you are under 55, a 30-year horizon may be too short, which lowers the number. If the gap is large, the plan may call for a smaller lifestyle, a later start, or income from a new role.
Step 6: Use the Gain Year for Estate and Charitable Moves
For calendar-year taxpayers, the gain year closes on December 31, so moves that depend on high income have a deadline. Cash gifts to a donor-advised fund can front-load several years of giving into the year with the most income. Know that for 2026, itemizers can deduct only contributions above 0.5% of adjusted gross income, and the value of deductions is capped at 35% for those in the top bracket.9
Use the same window to refresh your estate plan. In 2026 the federal exemption is 15 million per person (30 million for a married couple), the annual gift exclusion is $19,000 per recipient, and Ohio has no estate tax.10 Even if you are under the exemption, update wills, beneficiaries, trusts, and powers of attorney, because your assets have just changed shape.
Talk Through Your First 90 Days
You only get to do the first year after a sale once. If it would help to talk through yours, the team at Journey Advisory Group, led by Eric Pettway, CFA, is glad to. As fee-based fiduciaries, we build the plan alongside your CPA and attorney. You can reach us at info@JourneyAdvisory.Group or 800-749-7143, and you can find more guides in our life transitions hub.
Disclosure
This material prepared by Journey Advisory Group, LLC is for informational purposes only. It is not intended to serve as a substitute for personalized investment, tax, or legal advice, or as a recommendation or solicitation of any particular security, strategy, or investment product. Facts presented have been obtained from sources believed to be reliable. Journey Advisory Group, however, cannot guarantee the accuracy or completeness of such information, and certain information may have been condensed or summarized from its original source.
SEC Registration does not constitute an endorsement of the firm by the SEC nor does it indicate that the advisor has attained a particular level of skill or ability. Securities investments contain risks including the possible loss of principal. Neither asset allocation nor active management guarantee a profit or protection from loss.
Journey Advisory Group is a fee-based advisory firm and SEC-registered Registered Investment Adviser (RIA). Additional information about Journey Advisory Group's services, fees, and potential conflicts of interest is available in Form ADV Parts 2A and 2B, which can be obtained through the SEC's Investment Adviser Public Disclosure website at adviserinfo.sec.gov or by contacting the firm directly.
JAG does not provide tax or legal advice, and nothing contained in these materials should be taken as tax or legal advice.
References
1. Bradford Tax Institute. "2026 Capital Gains Rates." https://bradfordtaxinstitute.com/Free_Resources/2026-Capital-Gains-Rates.aspx
2. Cohen & Co. "Ohio Begins Broader Tax Restructuring with New Budget Bill: What You Should Know." https://www.cohenco.com/knowledge-center/insights/august-2025/ohio-begins-broader-tax-restructuring-with-new-budget-bill-what-you-should-know
3. US Tax Tools. "Quarterly Estimated Tax Calculator." https://ustax.tools/quarterly-estimated-tax-calculator/
4. Ohio Society of CPAs. "Fix to Form IT/SD 2210 a Win for CPAs." https://www.ohiocpa.com/communities/news/2018/07/05/fix-to-form-it-sd-2210-a-win-for-cpas
5. Ohio Revised Code. "Section 5747.01: Definitions." https://codes.ohio.gov/ohio-revised-code/section-5747.01
6. Iconic. "Escrow Holdback in Business Sales." https://iconic.co/blog/holdback/
7. BDO. "Book and Tax Implications of Earnouts." https://www.bdo.com/insights/advisory/book-and-tax-implications-of-earnouts
8. Morningstar. "What's a Safe Retirement Withdrawal Rate for 2026?" https://www.morningstar.com/retirement/whats-safe-retirement-withdrawal-rate-2026
9. Mercer Advisors. "Is a Qualified Charitable Distribution Still Worth It Under the New Rules?" https://www.merceradvisors.com/faq/is-a-qualified-charitable-distribution-still-worth-it-under-the-new-rules/
10. Wolterman Law. "Federal Estate Tax Exemption 2026: What Ohio Families Need to Know." https://www.woltermanlaw.com/blog/2026/07/federal-estate-tax-exemption-2026-ohio/