Business Purchase Loan Requirements
How to Tax Efficiently Sell Your Business*
“Buyers are looking for a great deal. Sellers are looking to get the highest price: a strategy that accomplishes both.”
What is the total cost a Buyer really pays for a business? Let’s refer to this total cost as “opportunity price”, this is not just the price the buyer pays for the business but the “total repayment costs in terms of gross, or before-tax, income … the purchaser will be required to earn to make the after-tax payments.”
Example Of Business Purchase
Example: The cost of the business is $100,000; the purchase must earn a gross income of $180,000 (assuming a combined 45% tax) in order to have the $100,000 after-tax income to purchase the business.
As for the Seller, they may want the highest price possible but the market will dictate what a buyer is willing to pay and what the business purchase is worth.
Tax Strategy On Business Purchase
Through a specific financial and tax strategy, a Seller can net out their desired profit from the business, while at the same time provide not only a very competitive price to the buyer but also an immediate tax deduction, thereby reducing the purchasers total cost even further.
When it comes to selling a business, through these time tested strategies, a business seller can end up getting top dollar for their business while simultaneous reducing their tax liabilities and providing a great deal to the business purchase buyer. A WIN-WIN for everyone, except maybe the taxman.
This is also great strategy for Medical and Dental Professionals looking to increase the value of their practices. If you are looking for a doctor, dentist, veterinarian, podiatrist, chiropractor, or a licensed member of the healthcare community, please contact Gustan Cho Associates at 800-900-8569. We offer unsecured loans plus business purchase loans for members of the healthcare community.
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