Thinking of selling your small business? Legal Counsel, P.A. is a business law firm in Orlando, Florida that can assist you. There are several things you’ll want to consider when selling your business. First of all, you’ll need to get a business valuation so that you can understand what your business is worth and what the sale price should be. Another early decision you’ll need to make involves deciding whether to sell your business as an asset sale or stock sale.
When it comes to selling a business, you have several options, with the two main options available being an asset sale or a stock sale. The method you’ll use for selling your business will depend largely on whether your business is a corporation or if it is a sole proprietorship or limited liability company. Your individual and business tax needs may also be a factor when it comes time to sell your business. Some business owners might choose to restructure their business to a corporation and then sell, while others might choose to just sell their small business as an asset sale. Ultimately, having a business law firm on your side to help you navigate these questions can make an immense difference. Have questions about what your options are when it comes to selling your business? Reach out to Legal Counsel, P.A., an Orlando, Florida business law firm that can help you sort through your options and find the best course of action forward.
Most business sales involve an asset sale. If you own a sole proprietorship or a limited liability company, you’ll most likely sell your business through an asset sale. With an asset sale, all of a business’s assets are sold to the buyer. Why would a buyer choose to purchase a business in this manner? With an asset sale, the buyer can often purchase equipment from the seller that he or she would need were he or she to start a new business. For example, if a buyer is purchasing a restaurant, an asset sale might include kitchen equipment, tables, menus, a bar, and other assets. Why would a buyer choose to buy a business rather than purchase this equipment? Many businesses also have intangible assets that have value, like the business relationships forged, their reputation in the community, and their branding. Some of these assets can be quite valuable indeed. For example, a bar might have a liquor license, which can be difficult to obtain in Florida’s liquor license lottery system. When a buyer purchases a business in an asset sale, there might be a wide range of assets the buyer is purchasing. This might include trade secrets, recipes, and other intangible assets, like the business name and trademark.
Asset sales offer certain benefits in that they protect a future buyer from taking on the old liabilities of a business. It also protects the future buyer from certain tax issues that can carry over with a stock sale. If you are thinking of selling your business and think an asset sale might be a good choice, consider speaking to Legal Counsel, P.A., a business law firm in Orlando, Florida today. Once you choose the best method to sell your business, the next step will be to estimate the value of your business. Our law firm can help.
A stock sale is another way to sell a business and it is available to corporations. Usually with a stock sale, the owner of a business will sell the majority stock to a seller. Sometimes two business owners each share 50% of stock ownership in a business, but in other situations, there might be other owners as well. Sometimes buyers might be one person, but in some cases, there might be multiple buyers as well. Stock sales can be complex transactions in terms of their tax considerations and benefits and in terms of the risk and benefits to buyers. Sellers can benefit from stock sales of a business because it can potentially reduce their tax burden, while buyers of a business run the risk of shouldering any of the liabilities the business has taken on over the years. These liabilities can include tax liabilities, debts, and liability for any lawsuit filed against the business.
How can a business seller benefit from a stock sale? By selling your business as a stock sale, the income you receive from the purchase will be treated by the government as a capital gain, not as regular income. Taxes on capital gains can be lower than taxes on income. It might be therefore possible to pay less in taxes in a stock sale rather than in an asset sale.
Thinking of selling a business as a stock sale? Have a corporation and want to sell stock in your business or add an owner to your business structure? Legal Counsel, P.A. is a business law firm in Orlando, Florida that can help you navigate the complexities of a stock sale.
Selling Your Business: We Help From Start to Finish
Business owners choose to sell their businesses for a number of reasons. Some small business owners are ready to retire. Others have worked hard to build a flourishing business, but are ready to move on to other ventures. Yet others have complex business needs that need to be taken into consideration and a business sale is a good financial move. Others might be facing bankruptcy, divorce, the death of a partner or spouse, or another major life change and need to sell their business. Whatever your reasons, finding the best course of action forward is important because it could mean more money in your pocket. Legal Counsel, P.A. is a business law firm in Orlando, Florida who works closely with business owners who are thinking of selling their businesses. Contact our firm today to learn more about how we can help.