Buying or selling a business can be a life-altering event, and the mechanics of a sale are far more complicated than simply negotiating an acceptable sale price.
Regardless of whether you are selling your business to start a new chapter in your life, or purchasing a business to pursue a new passion and career, you will need assistance every step of the way, and especially when it comes to your finances, and your taxes.
Most homeowners know very well that when it comes to selling or buying a house, your annual taxes start to get a little complicated. For sellers, profits garnered through the sale of a home are a factor come tax time, but so are expenses required to successfully sell a property, from advertising to surveys and closing attorney fees. For buyers, mortgage interest points and ensuing mortgage payments are suddenly a concern, as are home renovations, travel and moving expenses, and other necessities that may have a positive impact on your tax return.
Well, buying or selling a business has the same underling principals as buying a house, but it is a little more complicated.
If you are selling a business, how do you factor in all your business assets that may have depreciated or appreciated over the years? Is it better to sell your business for a one-time cash payment, or will your annual taxes benefit from payment installments? How does the length of time that you have owned the business come into play, and what expenses during the selling process can boost your tax return? What about the intricacies when it comes to the type of business and ownership, such as sole proprietorships, partnerships, and LLCs?
This terrain is equally tricky to navigate for buyers, as well, both for the immediate sale, and for the future work that running a business requires. Once a buyer purchases a business, there are brand new levels of tax laws to consider that can range from employment taxes to state sales tax liabilities. If your business makes a profit, or simply breaks even, how does that translate on your annual tax return? What about all those expenses, from equipment purchases to help wanted ads, that correspond with your business purchase to begin with?
These are just a few of the basic questions to consider when selling or buying a business. Keep in mind that during almost every business sale transaction, some surprise scenarios will almost certainly pop up along the way.
Last minute contract changes are not uncommon when it comes to the sale of a business. This can be coupled with financing difficulties or adjustments, valuation changes, equipment included or excluded in the sale, and several additional unforeseen hurdles that can be difficult to deal with on a daily basis.
Most important, regardless of whether you are a buyer or seller, you want to ensure two essential takeaways from the sale. You want to ensure that you have settled on the optimal price that will provide the most financial gain, and you want to ensure that when it comes to potential tax deductions, you have all of your bases covered.
This is where Waters Hardy comes into the picture.
At Waters Hardy & Co, P.C., we have handled hundreds of business sales for our clients, and can help ease the stress and uncertainty through every step of the process. Whether you are merging corporations, selling a longstanding asset, or simply buying a small business to call your own, we can make the endeavor less challenging and much more profitable, so that you can focus on the exciting new steps ahead, post-sale.
Contact us today with your questions about buying or selling a business, and we’ll work together to lay the groundwork for a successful new chapter.
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