Selling A Business FAQs

Contact: Richard Zarzecki, BBA Actg. MBA Fin, Former CPA

Business Planning Advisors, Inc.
277 Royal Poinciana Way, Suite 212,
Palm Beach, FL 33480

Cell: 772-285-0459
Office: 772-237-2409
Email: RZ@FloridaBusinessBroker.com

There is no simple answer or formula for evaluating this since The Tax code is always changing; so consult a professional on these matters. Currently, the cost of business intangibles such as Goodwill, covenants not to compete amounts, and trademarks are amortized over a 15-year period.

The Tax code is constantly changing; so always consult a professional on these matters. Currently, customer lists cannot be deducted in full at the date of the purchase. Generally, the fair market value of the customer list must be amortized over 15 years.

The importance of keeping adequate, legible, complete records cannot be stressed enough. Without records, you cannot see how well your business is doing and where it is going. This is your feedback mechanism and "report card." All business transactions should be documented with checks or credit cards. Undocumented cash transactions should be avoided if possible. At a minimum, records are needed to substantiate your tax returns under federal and state laws, including income tax and social security and sales tax laws. It also is necessary to substantiate your request for credit from vendors or loans from lending institutions. If you ever plan to sell your business, you will need to substantiate your representations and claims about the business. Speak to your local CPA to set you up on a good bookkeeping system. There are many good software programs that allow small business owners to keep their own books without being an accountant themselves. The IRS also has a wealth of information on their web site that helps small business owners to understand their record-keeping and tax obligations.

You should consult a tax consultant specializing in these transactions before considering this option. There is a possibility of deferral of gains on sales of certain types of corporate stock under Section §1045. Section §1045 essentially works like the old capital gains rules for the sale of a primary residence. Specifically, §1045 allows non-corporate taxpayers to defer (elect to rollover) the gain on the sale of Qualifying Small Business ("QBS") stock if the gain is invested in another business. Similar to the old law that applied to the sale of personal residences, the basis of the replacement QSB stock purchased must be reduced by the amount of gain that has been deferred.

This is a very brief overview of the complex rules under §1045. You should consult a CPA before thinking about this possibility. Please note: A Business Broker is not authorized to give you actual legal or accounting advice. Be sure to consult an attorney or CPA for advice in a business purchase or sale.

It depends on:

• The cash a buyer will have after paying business expenses or the “Adjusted Net Income” which is determined by adjustments to net income.
• The amount and consistency of sales and net income over time.
• The fair market value of business equipment, inventory, etc.
• The length of time in business and reputation.
• The industry you are in and the company’s potential for growth.
• Having an experienced professional evaluate the above

For Expert Guidance contact us today @ 772-285-0459