The best time to prepare for selling your small- to medium-sized business is from the start. Don’t wait until you’re ready to close the doors to think about planning a successful exit strategy.

Making a Strong Start

Setting yourself up for success means maximizing your potential for profit and minimizing your tax burden. It’s good to consider what business structure will provide the best benefit for your company — both during your ownership and when it comes time to sell.

An S corporation designation can provide beneficial tax advantages. Named after Subsection S of the tax code, this type of corporation does not pay taxes on earnings. Shareholders/owners report the income on their personal turns and pay any resulting taxes directly, avoiding double taxation.

Tax Considerations

Retirement funds, like IRAs or 401(k)s, can help reduce the annual tax burden on business owners while helping create future financial security.

Business structures affect how the individual assets that comprise a business are taxed when sold. Sole proprietorships, partnerships, and limited liability companies (LLCs) allow assets to be sold separately, providing more flexibility to the structure of a sale. The sale can be designed to better benefit both the buyer and the seller.

Let Us Help

Whether you’re ready to start out as a business owner or have ready to put your company up for sale after a successful career, it’s best to consult a tax professional before pulling the trigger. Not structuring your business correctly or failing to plan ahead to mitigate taxes can hurt your future financial security.

Expert help isn’t out of reach for your company. If you need help planning an entry or exit strategy for your business, contact us today. Call Numbers House at (865) 294-7300 or email us at hello@thenumbershouse.com.