Selling a business is a major milestone, but it involves plenty of moving parts. You have to think about finding the right buyer and getting all your financial records in order. It is a process that rewards preparation and careful attention to detail.
There are also many different ways to structure the sale, and each one affects your tax obligations. Understanding these options early on can save you from surprises and stress during the closing process.
The team at Frost Law understands the complexities involved in transferring ownership of a company. Our attorneys work closely with you to review contracts and protect your interests throughout the entire transaction.
Call us at (410) 497-5947 or fill out our contact form to schedule a consultation about your business sale.
When you sell your business assets or stock, it is usually considered a taxable event by the IRS. This means you will likely owe taxes on the profit you make from the deal, which can impact your final take-home amount.
If you're like most sellers, your primary concern is the capital gains tax, which applies to the increase in value of your assets. This rate is often lower than standard income tax, but it still takes a significant portion of your proceeds if you are not careful.
Frost Law can discuss any strategies that may be available to help minimize your taxes. Proper purchase price allocation across different assets can legally reduce what you owe and leave more money in your pocket. Structuring the deal correctly from the beginning is key to managing these liabilities effectively.
Many sellers prefer a straight cash sale because it provides immediate liquidity at the closing table. Getting the full amount upfront eliminates the risk of a buyer defaulting on payments later on. It offers a clean break, allowing you to walk away from the business without lingering financial ties.
While getting all your money at once sounds great, it also means recognizing the entire gain in a single tax year. This can push you into a higher tax bracket and significantly increase your tax burden.
However, receiving all the money at once is not your only option when negotiating the deal. You might consider an installment sale where payments are spread out over several years, or perhaps seller financing. While cash offers security, other methods can sometimes attract more buyers or result in a higher overall purchase price. It is important to look at your long-term financial goals before choosing a specific path.
Selling a business requires careful attention to detail and a solid strategy to reach your goals. You worked hard to build your company, and you deserve to see a fair return on that investment. We can help you understand the different ways to structure the sale to fit your needs.
Our knowledgeable team reviews every aspect of the sale to protect your legal rights and financial interests. We look for potential issues in the contract or tax structure that could cause problems down the road. We are dedicated to providing the guidance you need during this complex process.
Let us help you close this deal with confidence and peace of mind. Contact Frost Law at (410) 497-5947 to set up a consultation or fill out our contact form today.
