By Jason Tuzinkewich
The old saying “nothing is certain except for death and taxes” rings disturbingly true when selling your business. In many cases, the tax obligation will be the single greatest expense in the entire process. It is exceptionally valuable to have a tax advisor who knows all of the ins and outs of our complex tax laws. While the accountant that you have worked with from the very beginning has done a fantastic job of managing your accounting reports, and putting together your annual tax return, structuring the sale of a business is a different beast altogether and they may not be the best fit. Ask if they or someone from their company is a specialist. If not, work with your M&A Advisor to refer one to you. The specialist can work with your CPA to make sure you minimize your tax liability. At the end of the day it is not what the purchase price is but what you net after tax that is important.
Knowing whether you qualify for a 199 deduction, or can benefit from sections 179, 1231, 1245, 1250, or any of the other provisions within our US and state level tax codes requires a level of expertise typically found only in accountants who have specialized. What’s more, many of the considerations will need to be mapped out before accepting a letter of intent if you want to maximize your benefit.
It is critical to begin the tax structure conversation early in the sale process. Talk to your M&A advisor, and consider consulting a tax specialist.