Tax Implications from the Sale of Your Company

Are you thinking of selling your business?  Has your broker discuss with you the potential tax implications associated with the transfer and how you can mitigate them?  If not, perhaps you should talk with our advisers.

Selling a business could be both challenging and gut-wrenching at times, however, being prepared can help ease the process.  The following are a few issues to consider when selling a business as they pertain to tax issues from a business transfer.

Stock vs. Asset – Depending on how your business is organized, the framework of the transfer you negotiate with your buyer could be critical.  Should I sell the stock or the assets?  Each formation, whether it is a C-Corp, S-Corp, LLC, or Partnership, possess different tax treatment upon the sale.  The way your company is organized may affect the way you are taxed either at the corporate level or individual level and also may determine depreciation recapture.  Knowing how to negotiate and structure around these issues could make a difference in up to 30% or higher in your total net proceeds.

Allocation of the Sales Price – The allocation of sales price will determine how the proceeds are taxed under an asset sale.  There is an inverse relationship between how the buyer and seller wants the allocation.  How much of the final sales price should be allocated to consulting agreements, non-competes, fixed assets, intangible assets and other assets are a factor of how experienced and knowledgeable of a negotiator you have on your team.  

Installment Considerations – Are there any installment sale considerations?  Should there be?  Depending on your personal tax situation and any impending tax legislation on the horizon, an installment option may need to be considered as a tax mitigation strategy.  An experienced and knowledgeable negotiation can help in this situation.

There are too many other tax issues to consider when selling a business, but our experienced team of advisers can help you, not only advising, but negotiating between the parties.  Unfortunately, most business brokers never consider the tax implications, leaving it up to the seller’s accountant to handle after the sale; when it’s too late to turn back the clock.  Contact Trinity today to for a Free Feasibility Analysis of your business to determine if you are ready to go-to-market.

Preparing to Take Your Business to Market

At Trinity Transaction Advisory, we often work directly with people who have built their business from the ground up, and help them to transition their company to investors seeking to take their businesses to new heights.  When business owner come to us feeling tentative about the process of selling their company, it is very satisfying for us to close the sale of their business while maximizing overall value.

Unlike most business brokerages, Trinity takes a proactive role throughout the process of business sales.  By surrounding each transaction with a top-notch team, we are able to provide perspective and assistance at each turn, including business valuation, tax mitigation of the transfer, negotiation and structuring of the definitive agreements.  Selling a business is complex by nature, but our team is adept at navigating the ins and outs, helping our clients make the right decisions.  By allowing our team of experts to handle your transaction, allows you to focus on growing your company to maintain its value.

Synergy is critical in all business relationships, so finding the right buyer match is essential. Trinity also excels at matching buyers for our clients that providing smooth transition and a ‘win-win’ situation for everyone involved.