Orlando Business Brokers – Share Tax Tips For Selling Your Business
When selling a business in the Orlando and Central Florida area it is important to have your books and records organized and clear. At Transworld Business Advisors , our Orlando Business Brokers work with potential business sellers and make recommendations on how a seller’s financials should look to get the best outcome and terms for their business sale. As a business owner, there are certain tax benefits that come from ownership. Sometimes however business owners can get carried away with what they deduct and it is these questionable deductions that can cost a seller a higher price from buyers when looking to sell their businesses.
Tax records and financials all around are extremely important when selling businesses in the Orlando area because often times the buyer and seller do not know one another and the buyer might be new in town so have to make a judgment off of the tax returns. Businesses with the cleanest and clearest numbers are the easiest to understand and therefore get the best price at time of sale
Marked below on the sample tax form is what most buyers and SBA lenders will first look at when evaluating earnings and potential deductions on a tax record. The three most popular business deductions the officer’s salary, depreciation, and interest expense columns. Buyers, accountants, lenders, and even attorneys will look at those three columns and add those numbers to the taxable income column first and foremost. These are what we call good deductions. See below:
Other examples of good deductions include amortization and owner’s health insurance because these are good and provable deductions. There are other common deductions Orlando Business Brokers see as well, This list includes:
Auto gas (for personal use), Company Car (for personal use), Cell Phones (owner’s phone, spouse’s phone, kid’s phone, dog’s phone), Meals and Entertainment, Bad Debt, Advertising, Legal Expenses, Accounting Expenses and many many more
When evaluating businesses for sale in Orlando, there are many personal deductions that can be taken by business owners. These business deduction are to be carefully considered. Taking to much and coding them to the wrong line can cloud a deal and make it hard for a buyer to believe or even get financing. For example, using half the company’s earnings to pay for a Jaguar for personal use might cloud the deal. Another example poor deduction usage is putting expenses through the Cost of Goods section because it makes deductions much harder to add back.
As Orlando’s #1 Business Broker, Michael Shea works with business owners in Orlando and Kissimmee to prepare thier business for sale for the maximum price and the best terms. Subtle adjustments can mean the difference of selling or not selling
If you have any questions regarding the valuation of your business, how to prepare it for sale and how to get the best outcome contact Michael Shea at 321-287-0349 or email me at mike@tworld.com