Friends Don’t Let Friends Sell Businesses
Contributed by Drew McMillin, CFP(R)
Are you considering selling your business? Do you have a heart for giving? If you answered yes to both then let me stop you before you miss a big opportunity to potentially save HUGE money in taxes while at the same time giving more to charity.
It takes a lot of work to build a successful business to the point of selling it for a profit. For those business owners who do reach this point, they will more than likely face a high tax liability and as soon as their pen lifts off the signature line of the agreement that liability is set in stone.
However, if an owner donates some of their ownership interest (i.e. their stock in the business) PRIOR to the sale, they can deduct the fair market value of the shares donated! This is when the phrase “friends don’t let friends sell businesses” comes in. Many business owners have a heart for giving, but just are unaware of the opportunities to save money in taxes and give more to charity.
The reward for this planning is that the tax savings increase the amount you can give. The business owner can take that money and create a family foundation to support the causes they care about personally.
Do you have a friend who is considering selling their business? Make sure that they talk to us first about their giving opportunities!
The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete. Any opinions are those of Drew McMillin and are not necessarily those of Raymond James. Please note, changes in tax laws may occur at any time and could have a substantial impact upon each person’s situation. While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors of RJFS, we are not qualified to render advice on tax or legal matters. You should discuss tax or legal matters with the appropriate professional. Raymond James is not affiliated with Andy Andreas or the National Christian Foundation.