January 16, 2009
The much talked about repeal of the Bush Tax Cuts by Congress and the new administration may impact the sale of your business in two ways.
1. Small businesses pay taxes at individual income tax rates. If individual tax rates go up, tax expense on your P&L goes up, hence net income and owner benefit go down. This will directly impact market valuations based on owner benefit multiples, hence sales price will likely be reduced.
2. The Bush Tax Cuts cut the capital gains tax from 30% to 15%, hence the capital gains taxes paid on the net gain from sale of your business will double if it is retuned to 30%.
This is important as you plan your exit strategy. These two factors may make it a great time to sell as:
1. Buyers have yet to discount price based on new income tax policy.
2. Sellers of businesses having appreciated significantly in value can sell before the capital gains tax increase.
Call or email me at 800-599-0503 or eric@bluechipbizsolutions.com and we can discuss tax strategy and an appropriate time to sell your business.
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