Selling a business without paying taxes is possible, but it requires careful planning and strategy. In this article, we explain how to use strategies such as negotiating the sale of a sole proprietorship, selling a partnership interest, and deciding on a corporate sale of stock or assets to achieve this goal.

How to Sell a Business and Not Pay Taxes?
Selling a business usually triggers a long-term capital gain for the seller and federal capital gains taxes will apply. To avoid paying taxes, there are several strategies one can use.

#1. Hold Off On The Business Sale For At Least One Year
One strategy to avoid taxes is to wait at least one year before selling the business. This will allow the profit to be taxed as ordinary income rather than capital gains.

#2. Sell Your Corporation To Its Employees
Another strategy to avoid paying taxes is to sell your corporation to its employees. This strategy involves transferring shares of a company to your employees in exchange for their agreement to buy the business. Since the employees are now owners of the business, they are liable for any taxes due on the sale.

#3. Transfer The Business Through A CRT
A CRT (Charitable Remainder Trust) is a trust that allows you to transfer the business to a non-profit organization. The non-profit organization then pays you a fixed amount each year for a designated number of years. This strategy allows you to avoid paying taxes on the sale of the business since the proceeds are not taxable.

#4. Family Limited Partnership (FLP) and Recapitalization
This technique involves recapitalizing shares of a business into voting stock held by the business owner. The owner then transfers the stock to the family limited partnership, which is then sold to the buyer. The proceeds of the sale are then distributed among the members of the family limited partnership. This allows the business owner to avoid paying taxes on the sale of the business.

You’ll pay capital gains tax when capital assets from your business are sold. In the eyes of the IRS, your business usually isn’t just one big asset, but a combination of assets and liabilities. Therefore, you must take care to structure the sale of your business in a manner that minimizes your tax burden.

At Atlantabusinesses.com, we specialize in helping buyers and sellers with the sale and purchase of a business. Our experienced team of business brokers can help you determine the best strategies to minimize taxes on the sale of your business. Visit us today to learn more about our services and how we can help you achieve your goals.

What is the best way to minimize taxes when selling a business?

The freeze method for selling a business is a popular option. The company’s operations are stopped until the sale is finalized, which helps keep the company in good shape and facilitates a fast sale. Additionally, it allows the seller to avoid any potential taxes associated with the transaction.

What are the tax implications of selling a business?

When you sell the business, the amount of gain or loss you will have to report can be determined by subtracting the amount you paid for it (your basis) from the sale price. If you make a profit from the sale, you are liable for capital gains taxes on that money. If you sell the business for less than your basis, you will not owe any taxes.

Is the money earned from selling a business subject to taxation?

When a business is sold, the seller typically receives a long-term capital gain, which is subject to federal capital gains taxes.

What are the consequences if you own a business and do not pay taxes?

If you do not pay your business’s taxes, taking away your company’s resources may be the IRS’s course of action. This could involve the seizure of your company vehicles, equipment, and other possessions.