Selling a Business
Tax planning before you sell your business.
If there's an offer on the table, the most important tax decisions are probably still ahead of you. How the deal is structured, how the price is split, and what year the gain lands in all shape the tax on the sale, and most of it gets negotiated before anyone signs.
I'm a fee-only fiduciary. I build the tax strategy around the sale first, work alongside your CPA and attorney, and then build the portfolio that has to replace the income the business used to pay you.
Start with the deadline.
The Deadline
Much of the tax plan gets written in the letter of intent.
A letter of intent feels like a handshake. In practice it sets the frame for everything after it: what's being sold, how the price is allocated across the pieces, how much arrives at closing versus later, and who carries which risks.
Each of those choices has a tax consequence. The earlier your own tax situation is part of the negotiation, the more options you have.
If you've already signed, or already sold, don't assume the door is shut. Under current rules, some options for the capital gain portion stay open for up to 180 days after a sale. The clock just matters more.
The deadline
The letter of intent.
The question to take to your advisor
"Before I sign, has my own tax situation been a variable in this deal, or just something we report in April?"
Jones Fiduciary Wealth Management
What You Can Still Decide
The choices that shape the tax on a sale
None of these are exotic. They're ordinary parts of a sale, and they get decided by default when nobody looks at them through a tax lens.
01
How the deal is structured
Selling the company's assets and selling your ownership in the company are taxed differently, for you and for the buyer. The structure is usually one of the first things on the table.
02
How the price is split
In many deals the price gets divided across the pieces being sold. Some pieces are taxed as capital gains and some as ordinary income, so the split can matter as much as the number.
03
When the money arrives
Cash at closing, payments over time, a holdback, an earn-out. When you receive the money can change which tax year it lands in, and how big each year's bill is.
04
What happens to the gain
Some options for the gain have to be in place before closing. Others stay open for a while after it. Knowing which is which, for your deal, is most of the planning.
05
The building under the business
If you own the real estate the business runs from, it's often its own sale with its own tax rules and its own deadlines. Treated as an afterthought, its options are the easiest to miss.
06
The income you're replacing
The business paid you. After the sale, a portfolio has to. That's a different job from growing a balance, and it's easier to plan before the wire lands.
None of this is a recommendation for your situation. Which choices are open depends on your deal, your other income, and your CPA's and attorney's input.
How I Work Through It
Tax strategy first. The portfolio follows.
01
Read the deal and your return
I start with the offer, the draft terms if there are any, your statements, and your last couple of tax returns. That shows what the sale will trigger and which choices are still open.
02
Work alongside your CPA and attorney
They belong at the table. I bring the tax planning and the investment side into the same conversation, so nobody solves one piece without seeing the others.
03
Build the portfolio that replaces the income
Once the tax picture is settled, we build what comes next around the income you need, with every fee stated out loud.
Questions
What business owners ask before they sell
When should I start tax planning for the sale of my business?
As early as you can, ideally before you sign a letter of intent. That's when the structure, the price split, and the timing are still open to negotiation.
A year out is better than a month out, and a month out is better than after closing.
Is it too late if I already sold my business?
Not necessarily. Under current rules, some options for the capital gain portion stay open for up to 180 days after a sale, and there's still the return to plan and the years ahead.
Call sooner rather than later, because those windows don't wait.
Doesn't my CPA handle this?
Your CPA is essential, and I work alongside them, not instead of them. If your CPA is already planning the sale, good, and I'll work with them. The person filing the return and the person planning it need to agree.
Will you work with my CPA and attorney?
Yes. I coordinate with your CPA and attorney rather than working around them. My part is the tax strategy and what happens to the money afterward.
What should I bring to the first conversation?
Whatever you have: the offer or letter of intent, your last two tax returns, and a rough sense of what you'll need the money to do.
If all you have is a nagging feeling that you should be asking more questions, that's enough to start.
What does it cost to talk to you?
Nothing. The first step is a free Curiosity Call. Bring the offer, or just the question, and I'll tell you what I'd look at first.
Start With the Call
Talk before you sign, if you can.
Bring the offer, the draft terms, or just the question that's been on your mind. There's no charge and nothing to sign, and I'll tell you what I'd look at first.
If the sale already closed, call anyway, and soon.
No charge. No pitch. Nothing to sign.
