How to Keep More of What You Receive When You Sell Your Business

> Business owners naturally focus on the sale price.

> If your company is worth $10 million today, how do you make it worth $15 million or $20 million when you’re ready to sell?

> But increasing the sale price is only part of the equation.

The sale price gets the attention. What matters is how much you keep after taxes.

Some Tax Planning Has to Start Years Before the Sale

I worked with a California business owner who knew he eventually wanted to sell his company for hundreds of millions of dollars.

He wasn’t ready to sell yet, which gave us something valuable: time.

As part of his long-term tax planning, he moved himself and the business to Nevada. The move was done properly, with professional tax advice, and years before a potential sale.

Nevada has no individual state income tax. California taxes capital gains as ordinary income, with a top individual income-tax rate of 13.3%. On a transaction worth hundreds of millions of dollars, the difference can mean millions of dollars.

He didn’t wait until he had a buyer to start thinking about taxes.

Start tax planning before the sale process begins,
while you still have time to make decisions
that can affect how much you keep.

A future sale can raise tax questions around where you live, how the company is owned, what the buyer is purchasing, how the transaction is structured and how and when you receive the proceeds.

You need a tax expert looking at those questions before the transaction limits your options.

The worst time to discover a better tax strategy is after you’ve lost the ability to use it.

Bring Tax Planning Into the Conversation Early

Marc Asheghian, CPA, MST

Rick Norris brings the business-owner and transaction perspective.

Marc Asheghian, CPA, MST, leads the tax-planning side of that work, evaluating the owner, the business and the potential transaction to identify decisions that could materially affect how much of the sale proceeds the owner ultimately keeps.
By the time you’re negotiating with a buyer, some of the best tax-planning opportunities may already be gone.

Thinking About Selling in the Next Few Years?

Let’s spend 30 minutes looking at your potential exit and identifying the tax questions worth addressing before you’re ready to sell.

Want to increase what the business itself may be worth before you sell it?

Want to make the eventual sale easier for a buyer to understand, trust and complete?

This article is for general informational purposes and is not tax advice. Tax consequences and planning opportunities depend on the specific owner, business and transaction.