The intricacies of buying a business include all property related to it, including assets and investments. When you are buying a business, you can buy the assets or the legal entity, usually a corporation. These are some reasons why you should buy the assets of a business instead of the corporation, especially franchised businesses. Before making important financial decisions regarding your businesses, consult with a business broker.
The intricacies of buying a business include all property related to it, including assets and investments.
Taxes
Buying a profitable business lends you the opportunity to take advantage of specific tax credits. If you buy a profitable business, you will likely pay some goodwill, or the excess of the sale price over the value of the other assets purchased. Consider buying the assets in a business sale to qualify for a 1/15 deduction for the next 15 years. Speak with a business broker like the experts at Atlantic Business Brokerage to arrange the sale in the most favorable way for you.
Liabilities
If you buy a corporation, you are buying all legal liabilities connected to it that happened before the sale took place, including lawsuits, unpaid debt, and back taxes. Unpaid income taxes from a business can last up to seven years. Sexual harassment and workers’ compensation claims also fall under liabilities that would be carried over to the new owner of the corporation. Once you buy the corporation, all liability claims related to it are now your responsibility.
Depreciation
The previous business owner will often write off hard assets like furniture, vehicles, equipment, and more for tax purposes. Unfortunately, this makes the value on the balance sheets lower than the market value. However, during an asset sale, the price paid for the hard assets is the market value. This means the hard assets will depreciate slower over 15 years than they would if you bought the entire corporation. Look into business valuations for the business you are interested in buying to discover any changes to their practices or finances. Our experienced brokers are well-versed in sales and understand how to explain the best course of action for your entrepreneurial venture.
Buy With Atlantic Business Brokerage, Inc.
At Atlantic Business Brokerage, our mission is quite simple; we help sellers sell businesses, and buyers buy businesses! Over the past 30 years, ABBI has facilitated the sale of countless commercial properties, businesses, and franchised locations. With our unparalleled knowledge of the business purchase and sale industry and our network of contacts, we offer services to both buyers and sellers that no other brokerage firm can match. Contact us to discuss your business buying and selling goals today at 410-561-9800 or Toll-Free at 800-279-7569. Email us at [email protected], and follow us online on Facebook and LinkedIn.