10.23.19 Smart Business Dealmakers
Business owners who fail to consider the tax implications of selling their business are asking for trouble, says Randy Carver, president and CEO at Carver Financial Services, Inc.
“If you structure the sale incorrectly and the proceeds are deemed income as opposed to capital gains, there can be 50 to 100 percent more tax paid,” Carver says. “Depending on what you’re doing, there may be ways to avoid the tax altogether, or defer it. If you’re selling to another company and you don’t need as much cash, maybe you do a stock exchange. There may be no tax implications at all.”
While it sounds like an easy mistake to avoid, Carver says he has seen far too many business owners take a less-than-committed approach to developing a comprehensive exit strategy before putting their company on the market.