Tax advice should always be provided by a qualified tax advisor such as your CPA. While business brokers are unqualified to offer tax advice, we have observed tax strategies implemented by savvy tax professionals and share some of these below. A typical business is an enterprising entity or organization that indulges in industrial, professional, or commercial activities. These businesses can be structured as corporations, partnerships, sole proprietorships and other forms. Times change and, at some point, your desire or interest to continue your business may change. Many entrepreneurs look to exit or sell their ventures to a new owner who will continue to grow the business and take care of employees and customers. A successful sale can help the entrepreneur retire and enjoy the rest of their life. However, selling and buying a business requires following specific tax considerations (best advised by a competent tax planner CPA).
Read this blog to learn about the different tax strategies followed by business brokers in Dallas.
What Are The Most Followed Strategies Followed By Business Brokers?
You may have spent a short time or your lifetime growing your business. It takes grit and determination to build a successful business … and a strong motivated, entrepreneurial force drives the desire for most owners. However, usually after accomplishing all your business goals, owners gradually lose their motivation to run the business. It’s time to consider life after business and replace burnout with new passions. Ultimately, you may want to sell the business, whatever the reason. Therefore, hiring one of the best business brokers in Dallas is necessary for hassle-free business transfer. Let’s look at the tax structure strategies used by various tax planning experts follow in order to provide you with the most after tax sales proceeds.
- Consider Selling A Partnership Interest
Many business owners know what partnership means. The sale of an interest in a partnership company is generally considered a capital asset transaction typically resulting in a sizable capital gain as the company performance has continued to increase. A partial sale can take chips off the table and provide liquidity for future interests. Business and personal goodwill values can potentially be treated differently to minimize taxes.
- Brokers Help You In Negotiating Sole Proprietorship
In a sole proprietorship, where possible, the sale can be structured as an asset sale. As such, tax considerations are different for each separate asset class. Business brokers in Dallas can work with your tax advisor to ensure your sale triggers minimum (or optimum) capital gains.
- Tax On Corporate Sale Or Assets
Generally, Corporate stocks are sold through the transaction of shares and, often, can result in a better tax treatment than an asset sale. However, purchasers may discount the price to reflect their lower cost basis for their tax purposes. The IRS generally requires that asset sales have fair market values assigned to the assets (and mutually agreed by purchaser and seller). The goal is to exit with a lower seller tax bill and higher net sales proceeds.
- Choose an S Corporation Versus C Corporation
C corporations are the regular corporations under the Internal Revenue System tax structure. However, S corporations have special tax status with many tax benefits over the C corporation. Professional business brokers in Dallas work you’re your tax advisor to achieve 3.8 percent additional tax savings while selling your business when possible. Expert brokers can knowledgably work with your tax planner or CPA.
- Sell Assets To Employees – Employee Stock Ownership Plans
If a business exists as a C corporation, brokers can work with your tax planner to ensure you get better net sale proceeds by selling the business under employee stock ownership plans. The employees already understand the business and are a virtual ideal buyer. The business profits pay for the sale, so purchasers don’t have to search around for cash and funding.
- Installment Sale
This is among the best ways to minimize and defer tax on sale. Business brokers in Dallas working with your tax planner, can structure your deals in installments for sale. Tax is typically due when payments are received, and the sale price can typically be received over several years. Details on installment sales in the instructions to IRS Form 6252.
- Consider Reinvest Your Gain in an Opportunity Zone
Sellers that achieve large capital gains from selling their business can act within six months of the sale. Brokers can work with your tax advisor to reinvest your proceedings in a Qualified Opportunity Zone to save a hefty amount of profit from taxes. Further, this deferral is limited to being recognized by the authority under the specified date (and before December 31, 2026). Holding investments through this method can save taxes and offer a tremendous future appreciation.
Save A Lot On Taxes By Hiring The Qualified Business Brokers to work with your Tax Planners!
Selling a business is always a challenging task for many. Much paperwork, both at the federal and personal levels, is required to transfer your business. However, a business broker can knowledgably facilitate this process. Are you searching for one of the best business brokers in Dallas, Texas, who can help you sell your company at maximum proceeds? Contact Adam Noble Group, LLC, who can make your business transfer easy with the least taxes and more net return. You can contact us to learn more about our exit planning service and let our experts make your transfer easy. Read our many testimonials on this website, Google, Trustpilot and LinkedIn! Call us now!
During 3 decades of M&A service, Jeff Adam has successfully completed the sale of over 825 businesses and advised or completed 1,000’s of business valuations and exit plans. An entrepreneur in his own right, Jeff has started and grown 12 companies in fields including international finance, B2B services, business valuation, construction, screen printing, Mergers & Acquisitions, engineering, and manufacturing. Jeff has donated his time as a distinguished speaker at numerous national & international conferences since 1977 covering topics such as environmental services, engineering, media, craft breweries, exit planning, business valuation, charitable giving, management, business brokerage and M&A fields.
Jeff is President of Adam Noble Group, LLC, a national M&A Advisory firm, professionally valuing and confidentially selling profitable businesses owned by exit-motivated business owners to qualified strategic, corporate, private equity, partners, management, and first-time buyers. Jeff establishes rapport, builds trust, and educates business owners in the steps to meet their goals as they prepare and achieve the discreet, confidential exit of their business. Jeff exclusively represents sellers of $1M-50M value enterprises and endeavors to transfer their businesses to qualified, capable acquirers who will build upon the seller’s vision, goals, culture, and history. Jeff maintains lifelong repeat and referral relationships with sellers, their acquirers, and service providers.
Adam Noble Group has multiple M&A and business broker specialties: Manufacturing, Defense Industry, Oilfield services, Construction trades, Craft Breweries, Partnership Buyouts, Manufacturing, Service, and Wholesale Distributors.
Our M&A advisors and business brokers are all multi-industry entrepreneurs who have successfully exited their own companies. Jeff has walked in your shoes! Jeff wants to put the BIGGEST CHECK of your life in your pocket! Please contact Jeff, and he will confidentially answer all your questions.
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