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.

Allocating
Taxes

Understanding the Role
of the SBA

Starting
A Business

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