Selling a Business Tax Checklist

"1.Get good tax and legal counsel when you establish the initial form of your business – C Corp, S Corp, or LLC etc.

2.If you establish a C Corp, retain ownership of all appreciating assets outside of the corporation (land and buildings, patents, trademarks, franchise rights). Note: in a C Corp sale, there are no long-term capital gains tax rates only income tax rates. Long-term capital gains can only offset long-term capital losses. Personal assets sales can have favorable long-term capital gains treatment and you avoid double taxation for these assets with big gains.

3.Look first at the economics of the sales transaction and secondly at the tax structure.

4.Make sure your professional support team has deal making experience.

5.Before you take your business to the market, work with your professionals to understand your tax characteristics and how various deal structures will impact the after-tax sale proceeds

6.Before you complete your sales transaction work with a financial planning or tax planning professional to determine if there are strategies you can employ to defer or eliminate the payment of taxes.

7.Recognize that as a general rule your desire to “cash out” and receive all proceeds from your sale immediately will increase your tax liability.

8.Get your professionals involved early and keep them involved in analyzing various bids to determine your best offer."

Read more in this article from selfemployedweb.com

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