Skip to main content

Sale of Business Tax Implications

23 September, 2021

Post Image

Whether you're buying or selling, keep these points in mind

A major consideration in selling a business is the tax implications for both the buyer and the seller. Like many terms of a sales agreement, what might be good for the seller may not be for the buyer, and vice versa.

Creating a strategy to minimize the total taxes on the transaction is an important part of this process. The parties must take into consideration what the seller’s taxes are now and what the buyer will have to pay. Buyers and sellers should always remember there may be state and local tax considerations. It is always best to contact an accountant before entering into a sales agreement.

Seller's Issues

seller issues







A seller is going to want to structure the sale in a way that minimizes the taxes paid from the gain of the sale. The timing of taxable gain is a concern during the sale process. For example, if the seller finances part of the sale or accepts purchaser stock, the seller may want to structure the transaction so that any tax paid on the gain of the sale is delayed until the installment payments are received. This will save the seller money in taxes at the end of the sale.

Buyer's Issues

buyer issues

A buyer will be incentivized to structure the sale to help lower the after-tax cost of purchasing the business. A primary concern for the buyer will be the allocation of the acquisition cost. Buyers may want the acquisition cost to be allocatable to assets that can be expensed quickly. Some businesses may have a tax credit or a net operating loss that the purchaser might want for future use, although the utilization of these may be limited. Last, there may be assets of the business that are nontransferable, and the only way to structure the transaction is through a stock purchase.

Tax issues almost always arise when selling a business. It is suggested  you always work with a certified public accountant to better understand these implications and to minimize  the tax issues. 

By Phillip Wuollet CPA, Epstein Schneider, PLC


Thinking of selling your business?? Check out this podcast on how to do it! 

Selling Your Company Podcast


Add new comment

Restricted HTML

  • Allowed HTML tags: <a href hreflang> <em> <strong> <cite> <blockquote cite> <code> <ul type> <ol start type> <li> <dl> <dt> <dd> <h2 id> <h3 id> <h4 id> <h5 id> <h6 id>
  • Lines and paragraphs break automatically.
  • Web page addresses and email addresses turn into links automatically.

If cost and liability were not an issue, what's your one must-have at the company picnic?

Paintball Feld
Axe Throwing
10-Foot Nacho Trough
Potato Salad

Dang it's hot! Does your work vehicle have an orange water cooler?

It's not orange

Did you work for a painting contractor prior to owning your company?


Why haven't you hired a business coach?

Not worth the money
Too difficult to find a good one
I don't need one
I did hire one!

Has OSHA ever inspected your jobsite?


Who Buys the Paint Brushes?


What's the most paint you've ever spilled?


Did you take a week-long (or longer) vacation this summer?


If you had to rename your company one of the following, which would it be?


You meet someone new, and they ask what you do. What do you say?


On the job site, my painters mostly listen to...


Add Value for Your Customers with Nix Color Sensor

The Nix Mini 2 color sensor is ideal for those who appreciate the…

Read Now

Is Boring White Historically Accurate?

Neighbors often complain when a building gets a new paint job with…

Read Now

Contractor Surprises: Good & Bad

Read Now

Personas: The Plodder

Read Now