When selling a business there will always be tax consequences. The extent of same depends on how the sale is structured and how the consideration of the sale proceeds flow. With proper planning, the tax consequences may kept to a minimum or even deferred to a later date depending on the facts. Getting a tax expert involved at a very early stage of business sale negotiations is worthwhile.
Selling shares may, fact dependant, result in a lower tax rate than the sale of assets.
Selling assets is often accompanied by a transfer of liabilities. Assumption of liabilities can have a bearing on the amount of tax to be paid. In addition ensuring the selling price is allocated correctly to the assets being disposed of can go a long way in mitigating tax expenses.
Depending on the facts, your business sale transaction may be structured in such a way that you only have to pay the tax when you “cash-out” this requires careful planning though. Contact us for assistance.
