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Tax Implications for Selling Your Business: 4 Things You Must Know

Mississippi Business Brokers

Understanding how taxes affect you will help you stay compliant with the IRS while retaining as many business sale profits as possible.

    • You and Your Buyer Must Negotiate the Tax Benefits

Income and capital gains are taxed differently. As the seller, you’ll benefit more if most of your business assets are sold as capital gains. The buyer, however, stands to benefit from more tax breaks if they purchase the assets as depreciable or tax-deductible items. It’s up to the two of you to negotiate how the sale is classified and then document this on an IRS form.

    • Your Little Rock or Ridgeland Business Entity Can Limit Your Tax Options

Sole proprietorship and LLCs have more flexibility than corporations. If your Mississippi or Arkansas business is a corporation, you might be hit with a “double tax.”

    • Setting Up a Trust? Do That Before the Sale

Do you hope for your children or grandchildren to benefit from the sale of your business? You’d better set up a trust before trying to sell. This way, profits will smoothly roll over. Setting up the trust right after the sale can be complicated and incur unwanted attention from the IRS.

    • Research State and Local Tax Due

Depending on your Ridgeland or Little Rock business entity and structure, whether your sales are asset- or stock-based, and where those assets or stockholders are located, you’ll have different tax obligations for each state they’re connected to.

Strategic M&A Advisors in Little Rock and Ridgeland are ready to help you uncover every opportunity while selling your business. Contact us today! We can advise you every step of the way so that you’re prepared for a successful business sale and a bright future beyond.

Posted on behalf of Strategic M&A Advisors

 

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Mississippi office

200 Concourse Blvd, Suite 125
Ridgeland, MS 39157

(601) 714-2777

(601) 675-4449

Arkansas office

8201 Cantrell Road, Suite 315
Little Rock, AR 72227

(501) 588-8855

(601) 675-4449

Arkansas (501) 588-8855 Mississippi (601) 714-2777