As a business owner, you’ve likely poured years of effort and innovation into building your company. When it’s time to sell, it’s not just about getting the best price—it’s about how much you actually keep. Taxes can take a significant bite out of your proceeds, which makes proactive tax planning a vital part of the business sale process.
Here’s why reducing taxes before the sale is essential:
1. Maximize What You Keep
The proceeds from selling a business are subject to taxes, including federal and state capital gains taxes, and potentially the net investment income tax. Without proper tax strategies, these taxes can claim a large portion of your sale price.
By exploring approaches like structuring the deal as an asset or stock sale, leveraging tax-advantaged investments, or using installment sales, you can potentially reduce your tax liability and keep more of your hard-earned wealth.
2. Optimise Timing
Timing is crucial for tax efficiency. Selling during a year of unusually high income could push you into a higher tax bracket, increasing your taxes. Planning ahead allows you to consider deferring income, staggering payments, or spreading the sale proceeds over multiple years.
Changes in tax laws can also impact the cost of selling your business. Staying informed and acting strategically ensures you’re prepared for new regulations.
3. Align with Your Goals
Selling a business is more than a financial transaction—it’s a major life moment. You may want to:
Tax planning lets you allocate more wealth toward these goals instead of losing it to unnecessary taxes. Tools like charitable remainder trusts (CRTs) or donor-advised funds (DAFs) can help reduce taxes while helping you support meaningful causes.
How To Start
We believe that effective tax planning for a business sale requires collaboration with financial planners, tax specialists, and attorneys to create a strategy tailored to your goals.
At JN Private Wealth Management, we help business owners navigate the complexities of selling their companies while preserving as much wealth as possible.
Don’t let taxes take more than necessary. Contact us to start planning and help protect your legacy.
Every investor’s situation is unique and you should consider your investment goals, risk tolerance and time horizon before making any investment. This information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Past performance does not guarantee future results. Investing involves risk and you may incur a profit or loss regardless of strategy selected. Be sure to contact a qualified professional regarding your situation before making any investment or withdrawal decision. Any opinions are those of the author, and not necessarily those of Raymond James. Expressions of opinion are as of this date and are subject to change without notice. Raymond James and its advisors do not offer tax or legal advice. You should discuss any tax or legal matters with the appropriate professional.
Please note, changes in tax laws may occur at any time and could have a substantial impact upon each person’s situation. While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors of RJFS, we are not qualified to render advice on tax or legal matters. You should discuss tax or legal matters with the appropriate professional.
Donors are urged to consult their attorneys, accountants or tax advisors with respect to questions relating to the deductibility of various types of contributions to a Donor-Advised Fund for federal and state tax purposes.
Please be aware that there may be substantial fees, charges and costs associated with establishing a charitable remainder trust.
