Business Selling Guide - Tax Considerations

on 10/16/2015 - 10:31 am

Many business owners run into problems when they sell their companies because they don’t review the tax laws. This is why entrepreneurs must learn the tax guidelines by working with a reputable business consultant.

Understanding the Tax Laws

If your business operates as a partnership or a sole proprietorship, the buyer will get all of your company’s assets. The money that you receive after the sale is completed will be processed with your personal tax return.

If a company is an LLC or an S-Corporation, the owner can sell the stock or the assets. People who run an LLC or S-Corporation have more options when they file their taxes. To learn more about the tax requirements for LLC and S-Corporations, contact a company that specializes in businesses for sale Virginia Beach VA.

Entrepreneurs who run C-Corporations usually hire a consultant during tax season for financial reasons. The process of calculating taxes for C-Corporations is extremely challenging if many assets are sold during the selling process. You will have to pay taxes on the sale if the client buys the assets without the stock. Then, the government will tax you again according to the amount that was removed from your corporation. 

How to Lower the Capital Gains Tax

You must allocate the price of your business by creating a contract that addresses the structure of the sale. For example, you can allocate most of the price to your equipment and a smaller portion to goodwill. However, this kind of arrangement has risks because it may depreciate certain expenses.

You can also lower the capital gains tax by starting a new business after your old business is sold. This is possible because the IRS will let you spend the income on startup expenses. 

In some cases, a portion of a business’s sales price may be used to fund training courses for the new owners. If you offer the courses as an employee or an independent contractor, the capital gains tax will be much lower.

If you need help preparing your business for sale, visit 


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