Can I hand it to my kids and still get paid?

Selling a business to a family member can give you the retirement income you need and keep your name on the trucks. It can also strain a family for years if it is done on a handshake. The difference is almost always the same four things: a fair price, a written payment plan, a licensed successor, and an honest conversation with the children who are not in the business.

This page explains how each piece works in plain terms. It is not tax or legal advice. Gifts, estates and family sales have rules that turn on your numbers and your state, so use this to prepare for a meeting with your CPA and an attorney who does business transfers.

Treat it as a real deal

Many owners say their kids do not want the business, and the question becomes what the company is worth beyond equipment and real estate. If one of yours does want it, that is good news. But a family buyer is still a buyer. Gallup found that 74% of employer business owners plan to sell or transfer the business when they step away, yet most lack a written succession plan.

A real deal means:

• a price based on what the company earns, not on what feels fair at Thanksgiving;
• a signed purchase agreement and promissory note;
• a plan for the license, insurance, bonding and bank accounts;
• a date when you stop making decisions.

Step 1: Set a fair price

Start with a range. Our free estimate gives you an illustrative range based on what you tell us, and the plumbing valuation, HVAC valuation and roofing valuation pages show how it is built. It is an educational estimate, not an appraisal.

The price matters for tax as well as for fairness. The IRS treats as a gift any transfer where full consideration is not received. So if you sell to your daughter for well below what the business is worth, part of that sale may be a gift. For 2026 the IRS lists an annual exclusion of $19,000 per person receiving a gift ($38,000 for a married couple giving jointly), and the giver is generally the one responsible for any gift tax. Ask your CPA whether you need a formal appraisal, how a discount would be treated, and whether a gift return is needed.

Some owners choose a mix on purpose: a sale at a fair price, plus gifts over time as part of their estate plan. That is a decision for you, your CPA and an estate attorney.

Step 2: Agree how you get paid

Most children do not have the cash to buy a business outright. The usual answer is a down payment plus a seller note: you lend them most of the price and they pay you from the profits over several years.

What a seller note should spell out (your attorney writes it):

• Interest. A note with no interest or very low interest can create tax problems. The IRS says if an installment contract lacks adequate stated interest, part of the principal can be treated as interest using the applicable federal rate.
• Payment schedule. Monthly is common and easier to track.
• Security. What you can take back if payments stop, for example the shares or the equipment.
• What happens if they cannot pay. A grace period, a restructuring option, and the point where you step back in.
• Your role. A separate consulting or employment agreement, so your pay for working is not mixed with the price.

Because you get paid over years, a seller note is usually an installment sale for tax purposes. Under the IRS rules you report the gain as you receive payments. That can spread out the tax, but it also means your retirement depends on the business doing well under your child. Run your numbers in the net proceeds calculator with your expected down payment and term.

Step 3: Solve the license before anything else

In the trades, the license often belongs to a person, not the company. If you hold it, your son or daughter may not be able to run jobs the day you step away.

If your child is a journeyman today, the path to a master license can take years. Start now. Plumbing owners should read does my license transfer when I sell. Rules vary by state, so check with your licensing board.

Step 4: Be fair to the children who are not in the business

This is where family sales go wrong most often. One child gets the company and the others feel left out, or the child running the business feels the others are living off his work.

Ways families handle it (talk these through with an estate attorney):

• Sell at a fair price, not a gift. The child in the business pays full value, and the money becomes part of your estate for everyone.
• Balance with other assets. Other children receive savings, real estate or other property of similar value.
• Keep the building separate. You keep the building and rent it to the company. The rent is income for you, and the building can go to whoever your estate plan says.
• Put it in writing and tell everyone. Surprises at a funeral cause more damage than a hard talk at the kitchen table.

Step 5: Give it 2 to 3 years

Advisers tell trade owners to start at least three years ahead. A family sale needs that time even more, because your child has to learn the parts of the job you do without thinking.

For the role you play after closing, read should I stay on after selling, or walk away. If no family member wants it, a key employee may, so read could my foreman or GM buy me out.

Common mistakes

• No written agreement. A handshake deal leaves you with no recourse if payments stop.
• A price that is really a gift. A sale far below fair value can create gift tax questions you did not plan for.
• Forgetting the license. If you are the only license holder and you leave, the company may not be able to work.
• A note the business cannot carry. Payments sized on hope, not on actual profit, put your retirement and your child at risk.
• Staying the boss. If you keep making every decision, your child never learns, and your note depends on them learning.
• Leaving siblings out of the conversation. Fairness talked through now is cheaper than a family fight later.

Questions to ask your CPA, attorney or planner

1. What is a fair price range, and do I need a formal appraisal for this sale?
2. If I sell below fair value, how much is treated as a gift, and do I need to file a gift return?
3. What interest rate does the seller note need to avoid tax problems?
4. How is the seller note taxed as I receive payments?
5. What security should I take, and what happens if payments stop?
6. How do I keep things fair for my children who are not in the business?
7. Does my child need their own license before closing, and how long will that take?
8. Do the note payments plus my other income cover what I spend each year?

Sources

1. Reddit r/Roofing, Has anyone ever sold their roofing company?
2. Gallup, Most Small-Business Owners Lack a Succession Plan
3. IRS, Frequently asked questions on gift taxes
4. IRS, Topic no. 705, Installment sales
5. Texas State Board of Plumbing Examiners, Responsible Master Plumber
6. Florida Statutes 489.119, Business organizations; qualifying agents
7. California CSLB, Change in Personnel
8. Mass.gov, Apply for a plumbing business license
9. Contracting Business, The 12 Essential Steps for a Profitable Contracting Exit Strategy, Part I