Impact of Tax When Selling a Business

What is the impact of tax when selling a business? Most small business owners spend a lot of time wrestling with the decision about when they will put their business on the market and try to sell it. There is no question that selling a business is an important decision for its owner as it touches many aspects of their life. These aspects of their life include their financial security, their perception of how successful the business has been or alternatively, has the owner taken the business as far as they can take it. However, probably the most important aspect of all is what the owner wishes to do with their future and whether or not they see themselves owning and operating the business.All of the above and many more reasons take time to consider arriving at the right answers. If the owner no longer sees themselves owning and operating the business and wish to sell, there is an important need to consider the tax implications if they sell the business. The tax implications happen at two levels. The first level is the tax consequences preparing the business for sale. The second level is the impact on taxes when the business moves from the current owner to the buyer. If you are considering selling your business, here are some tax consequences to consider as you contemplate whether or not you will sell the business.
Understand the differences between a Stock sale and an Asset sale. Buyers generally prefer an Asset sale as it eliminates legal liabilities and allows the buyer to start depreciating assets all over again.
Consider maximizing the amount of charitable contributions to closely held business interests
Consider receiving some of the purchase price of the business in installments such as through payment of a salary, a management agreement or a consulting agreement, This allows the seller of the business to receive income when they stop working in the business and therefore no income tax for wages or salaries.
The tax benefits of an installment sale. An installment sale allows the seller to be paid some of the proceeds from the sale of the business to later years thereby spreading out or deferring to future years the tax liability the income would generate.
An additional strategy with the last suggestion is to increase the rate of interest the seller is paid on the installment sale once again deferring to future years the tax liability.
Understand that the value the business sells for revolves around the discretionary earnings of the business so all cash that flows through the business is reported, non business discretionary items are no longer run through the business and any unusual one off occurrences are clearly documented so a buyer can see they are not a normal part of the way the business operates. For example, the business may have a settlement with an employee that involves a one-time payment or the owner may be going through a divorce and paying the attorney fees through the business. These one-off events reduce the profitability of the business but the appraiser should not consider these when they appraise the business.
The tax treatment for different types of legal entities is not the same. A sole proprietor, LLC or partnership will have much different tax outcomes to a corporation. The tax treatment may be entirely different for an S Corporation than a C Corporation. If the owner of the business wishes to maximize their tax position it requires an appropriate amount of planning and guidance.Because the tax impact from selling or buying a business is complex and can create tension in the transaction, a company that specializes in business exit tax strategies to help both buyers and sellers is Walker Advisory Services in Texas. Walker Advisory Services can work directly with you to offer their tax planning suggestions or in conjunction with your CPA or tax agent. Their specialization of tax planning strategies exposes them to this difficult area of tax law and uniquely positions them to support the nuances that relate to the selling of a business or buying of a business.

Business Planning and Visioning – The Key to Success

One of the biggest problems that many would be entrepreneurs face is that they do not believe that they can start, and run, a successful business on their own. They believe that only those with high level degrees in business or related fields have the skill and talent to create a company, and that they’re stuck in the day to day drudgery of their jobs forever.The truth is that whether you have a degree, or whether you never even finished high school, the key to business success is often in the business planning and visioning you do, rather than the certificates and diplomas you hold.But what is business planning and visioning?I like to think of business planning and visioning a little bit like a road map to success. The process involves a series of exercises that are designed to help you decide how to get your business from the idea stage, to the point where you break even, and start making a profit, and beyond.There are many ways to go about business planning and visioning, and, contrary to popular belief, your business plan does not have to be written in any kind of formal language – unless you plan to use it to apply for financing.The simplest way to get started on your business plan, is to sit down with a piece of paper and a pen, and start jotting down whatever ideas you have that relate to the business you’d like to run.Once you’ve assembled a healthy amount of information on what your business will be about, it’s time to begin the process of creating a structured business plan, but again, this need not be a difficult or technical process. It is simply a means of organising your thoughts about your business into a logical and easy to follow document that will grow with your business, and help you to decide what your next step will be along the way.Typically, a business plan is made up of several different sections. These include the executive summary, a general description of your business, your products or services, a marketing plan, an operations plan, a section on the management and organisation of your new business, your personal financial statement, start up and operational expenses, a financial plan and any appendices you may want to add to the document.If all that sounds like a lot of technical mumbo jumbo that you are never going to be able to finish, do not worry. Business planning and visioning is not supposed to be a task that you dread, or that makes you want to run away! Take it one step at a time, and take your time to write down everything you believe will be relevant to the start up and running of your business.Include the form of company you are planning to start, whether you will have partners in your business, and who your target market will be in the general description section. Figure out how you are going to market your business and to whom and write down where you may find such people(s), and your products and services, and write those methods down in your marketing plan. When it comes to operations, will you be running a cash only business, or accepting credit applications? Will you operate from premises, or from your home? When it comes to financial matters, decide what you will need to start your business, and what it will cost. Think about what it will cost to run your business, including salaries or wages, premises rental, stock and utilities.Ideally, your business planning process should take several weeks or even months, and you will add to the plan as you go along, writing down everything you can think of that will take your business from start up to success. That document will also accompany you as you work on your business, changing and evolving with your business.The main benefit of formal business planning and visioning to the business owner is that it forces you to think about all the different factors that will determine the success of your business venture. It also helps you to create a logical ‘road map’ for your company, and gives you something to refer to during the often frantic and tumultuous process of launching a company.One trick that I’ve found works quite well when you’re in the throes of the business planning and visioning phase of a start up is to think about where you would like your business to be in two or even five years. Then work backwards, through each of the steps that you would have to take in order to get from where you are now, to where you would like to be.Business planning and visioning is a combination of imagination and planning, which allows you to see past what you have now, to what you would like to have in your company. It focuses your mind, and gives you an opportunity to think about the steps that will be needed to make a success of your company, but it is not something that requires you to have a degree! All you need is a passion for your chosen business, a little business knowledge (that you can find in any small business book), and a logical method of planning.The old saying goes: those who fail to plan, plan to fail, and that is particularly true of starting a business. So spend some time on your business planning and visioning now, and launch your business with a clear road map in mind, and a good idea of the direction you are heading in, and how you will get there.

Best Practices – Choosing a Car Transport Shipping Company for Interstate Car Transport

So, you’ve decided to move to a new city.Maybe you’ve been offered have a great opportunity that you simply can’t pass up, or you just want to have a fresh start in a different part of the country. Your plan is to pack as much of your personal belongings as you can in the trunk of your car, throw your bikes on the rack, tie a few miscellaneous items on the roof, load up the wife, the kids, the dog, and away you go!Your stuff is all packed up and the furniture movers have been scheduled and now you’re just waiting for the big day to arrive. But what if you like most of us have two or even three cars, how are you going to get them all to your new home? The simple solution: consider hiring a car transport shipping company to move your car for you.Car movers can transport your vehicle to your new home safely and securely, without the risk of you having to drive it across country yourself. I don’t know about you, but the thought of having my car break down on me on a dark stretch of road in the middle of nowhere with my entire family in it, is not my idea of a good time. And it certainly is not the way I would want to start my journey into a new home.With a professional car mover your car, truck, RV, or SUV will arrive at your front door with absolutely no wear and tear, and without the worries of you trying to drive it yourself. All for a lot less than you think. Some car movers can even transport your motorcycle or boat, and can make special arrangements to ensure that your rare classic or high-end luxury vehicle is well protected from all the elements throughout the entire trip. But before you go out and hire a company to move your car there are a few things you need to know and do to make the journey as smooth and worry free as possible. After all you already have enough things on your plate to deal with. So let’s get started, shall we?Choosing a Car Transport Company – Do Your ResearchResearch different car transport companies to get an idea of what they offer in terms price and service. The internet is a great place to start when it comes to getting price quotes, but be forewarned that if the quote you get seems too good to be true, then it probably is. As is the case with most things, you get what you pay for. Look for a company that provides a high level of quality service rather than one that offers the lowest price. However, it is a good idea to get several quotes before you decide on which company to go with.You should know that in most cases a car transport company will not be able to ship your car straight through from one location to another. Transport trailers can hold up to twelve cars at a time with each car going to a different location, so your car may be carried through other drop sites before arriving to you at your specific destination. Make sure to inform the transport company if you want your car shipped straight through to you, as they may have to arrange for a different type of trailer to move you.If your car is an expensive luxury type or a specialty car, make sure to tell the company that as well. They will arrange for your car to be transported in an enclosed trailer which provides additional security and extra protection from the elements. Have patience and get a delivery date from the transport company so that you have a time frame of when your vehicle will be delivered.The actual drop off rotation and the delivery route will be decided by the driver so depending on where you are located, your delivery could be sooner than expected or delayed a short time. There may be occasions when door to door service is not guaranteed, usually it’s because the size of the transport trailer may not enable the driver to easily get in and out of residential areas. If that is the case, expect the driver to contact you and arrange for you to pick up your vehicle at a more accessible location, possibly a depot or a parking lot close to your home.Vehicle Transport 101 – Before You Ship Your CarBefore you ship your car make sure that it is running properly and has no overlooked mechanical problems. If your vehicle does not run you may be charged additional fees if the driver has to manually push it on or off the transport trailer. Always inform your transport company if there are any problems with your vehicle when you first contact them. This way everyone is on the same page, and you will avoid any unpleasant surprises when you receive your invoice. The more upfront information you give about your vehicle the more accurate your shipping quote will be. And, remember to provide them with a reliable contact number while your vehicle is in transit so that the driver can call you if necessary.It’s a good idea to have your vehicle washed before it is picked up by the transporter, this will allow you and the driver to make note of any preexisting scratches and dents. Make sure your car has no leaks before it gets put on the trailer or it could drip fluids onto another person’s vehicle while in transit. The battery in your car should be charged and secure, the fuel level in your tank should be as low as possible, and your car alarm system should be disabled so that it does not drain your battery in the event that it goes off unnoticed during transit.If you are moving to a different climate either hot or cold, it’s a good idea to make sure that your vehicle has an adequate amount of coolant or antifreeze in it so as to avoid any unwanted surprises when you try to drive home from the delivery location, assuming that the driver was not able to provide you with door to door service. And if your car has an antenna, make sure that you remove or retract it so that it does not get torn off or accidentally scratch another vehicle.Car Shipping – Rules to RememberLastly, remember to secure or remove any loose items inside your car that may shift around during transit, and take any important personal items with you that you may need access to such as your laptop or cell phone, as it may be several days before your car arrives at its destination.If you follow these relatively simple steps you should have no trouble at all when transporting your car or other type of vehicle. Just remember that a little preparation goes a long way!