The 4 Step Prep To Selling Your Business
From jumping in under-prepared to experiencing dwindling profits, there are many reasons you might decide on selling your business. Doing so can have a substantial impact on taxes, cash flow and your lifestyle. To help you potentially maximize the value of a sales deal and keep your assets protected, you should put a strategic plan in place before you ever put pen to paper.
Contact us to build a sales strategy
We specialize in this area and can help you maximize the financial value of the business. We’ll also define a strategy in alignment with your family’s goals and objectives as well as guide you through the process of interviewing investment bankers.
Create a tax plan
As we mentioned, selling your business can have a huge impact on your taxes, as much as 23.8 percent could be applied to your profit on sale. A little tax planning before selling will help in maximizing deductions and avoiding penalties. Before completing the sale, we’ll calculate anticipated taxes based on projected gains and determine if any estimated tax payments are required along as well as year-end payments.
One strategy that we use frequently, is selling your business over time rather than all at once. This offsets the tax impact and involves collecting payments over several years, allowing you to recognize gains over time and potentially avoid higher tax brackets.
We’ll clean up your finances
Before you begin talking to buyers, we need to eliminate any financial items not directly related to operating expenses. This can include insurance or salaries for nonworking family members, as well as cars, expense accounts and other discretionary expenses. If it’s not something the buyer would want to pay for, we’ll get rid of it.
We schedule a final review
Together, we’ll review an in-depth analysis of all financial statements. You have two options. One, Garza & Harris will provide an opinion of the company’s financial status and identifies potential issues. The review provides "limited assurance" that nothing serious came to our attention. Two, we conduct a full audit of the company's management and an independent verification of financial information. An audit provides the highest level of assurance that the financials are in line with generally accepted accounting practices. This might be the best option for owners preparing to sell a business.