By Steve Julal
Selling your Business
There are many reasons to sell a business. Maybe you’re in ill health or ready to retire, and now that the business is profitable, you’re ready to cash in. Whatever the reason, selling a small to medium-sized business is a complex venture and many business owners are not aware of the tax consequences.
If you’re thinking about selling your business, the first step is to consult a competent tax professional. You will need to make sure your financials are in order, obtain an accurate business valuation to determine how much your business is worth and what the listing price might be, and develop a tax planning strategy that minimizes capital gains and other taxes in order to maximize your profits from the sale.
Accurate Financial Statements
The importance of preparing your business financials before listing your business for sale cannot be overstated. Whether you use a business broker or word of mouth, rest assured that potential buyers will scrutinize every aspect of your business. Not being able to quickly produce financial statements, current and prior years’ balance sheets, profit and loss statements, tax returns, equipment lists, product inventories, property appraisals, and lease agreements may lead to loss of the sale.
Many business owners have no idea what their business is worth; some may underestimate whereas others overestimate — sometimes significantly. Obtaining a third party business valuation allows business owners to set a price that is realistic for potential buyers, while achieving maximum value.
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