Henry Roth Salon and Day Spa  Henry Roth Salon and Day Spa (former owners, Henry and Carol Roth, pictured at left) is one of the most respected salons in Houston. As a well-established part of the Champions/Willowbrook community for over 25 years the accomplished Henry Roth staff provides exceptional customer service along with first class hair designs, supreme facials, transcendent massages and top-notch manicure/pedicures. Henry Roth will continue his hair styling services while the new owner, Uzma Sohail (pictured center-right), will bring in additional luxury spa services.
Marcia Bowron (pictured at far right) listed the business and sold it. |
Financing and Tax Implications of Selling Your Business
(Inc. Magazine by Mike Handelsman, General Manager of BizBuySell.com)
Taking the time to research the financing and tax implications of a sale can provide you with a strong advantage come negotiation time. Before you can understand the importance of negotiating a final small business sale agreement, it pays to brush up on facts about how sales are financed and how proceeds are taxed. Why? Because every decision regarding the payment structure affects when and how money transfers from the buyer to the seller and how the payments are taxed. No one is asking you to become a financing or tax pro. That's what your sale advisors do, and you'll want to call on their advice through every step from here through to the closing of your deal and the transition of your business to its new owner. But knowing some basic information will help you understand the advice you're receiving from those who are trained and up-to-date on the legal, financial, and tax implications of small business sales. This topic is particularly important today with the pending debate on whether the Bush-era tax cuts will be extended beyond the end of 2012. The information is necessarily detailed and extremely important since taxes, and therefore net dollars to you as the seller, hang in the balance. Read Entire Article |
How Does Capital Gains Affect the Sale of a Bus iness?
Unless Congress acts to extend the Bush tax cuts, the current capital gains rate of 15% will increase to 20% at the beginning of next year.
We'll have to play the wait and see game again to see if someone blinks.
Another tax of which you may not be aware is the additional Medicare Tax on investment income that comes into play as a result of the 2010 health care reform act. The Medicare Tax adds an additional 3.8% tax for most types of investment income, including capital gains. It applies to single taxpayers earning more than $200,000 and married taxpayers with combined income of more
than $250,000.
Therefore, the combined impact of these increased taxes on business owners who sell their business after 2012 could be a 58.7% increase - from 15% to 23.8%.
As a simple example, if the profit from the sale of your business is $100,000, you would pay $15,000 under the current capital gains rate. At the 20% rate those taxes would increase to $20,000. If your income qualifies you for the higher rate of 23.8%, your tax liability would increase to $23,800.
More likely than not, the profit from the sale of your business will be higher than $100,000. Do the math and find out what it would mean to you. |
