Tax Planning & Preparation
Long term capital gains taxes when selling a business
The long term capital gains rate applies to assets that have been held for over one year, which is usually the case in the sale of a business.
Calculated by taking the selling price of the business, and then subtracting disposal costs and your “basis.”
Debt obligations included in calculation
Personal guarantees included in the calculation, too
Depreciation is taxable as income
Sometimes the calculation can be complicated and requires the discernment and skills of a CPA.
Small Business Administration
The Small Business Administration
The SBA is an agency of the U.S. Department of Commerce and helps to guarantee loans for small businesses.
When buying or selling a business the paperwork is substantial, but a buyer can deal with it usually without much professional help
An SBA loan can be closed in six weeks, as long as both buyer and seller act in a timely manner
Banks make the loans (not the SBA) guaranteed by the SBA
While loans are usually collateralized, the funds (under an SBA loan) to purchase a business can be secured with only the business’ cash flow
Banks like additional collateral, but a buyer with good credit may be able to enhance the deal with a significant down payment.
Starting a Business
Starting a Business
One of the most important first steps to take is to build a loyal customer base.
What makes your business unique? How is your business different from others?
Do you have enough resources to sustain yourself for at least three years?
Are you savvy enough to invest in networking and developing the marketing skills that you will require?
Are you doing a realistic evaluation of your skills and the market you are planning on entering?
For many prospective entrepreneurs, a serious question is whether to start a business or buy an existing one.
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