SELLING YOUR BUSINESS? DON’T MISS THESE TAX-SAVING STRATEGIES

Written By Brenna Conway

At Peer Executive Groups, we know that the decision to sell your business is never just financial—it’s personal. But when the time comes, it’s crucial to have a solid exit strategy that maximizes your after-tax proceeds. Whether you’re passing your company to the next generation or selling to an outside buyer, here are several tax-saving strategies every owner should understand:

  •  Structure Matters: Stock Sale vs. Asset Sale: A stock sale typically favors the seller from a tax perspective, while buyers often prefer asset sales to avoid liabilities. Understanding the implications of each can help you negotiate more effectively and reduce your tax burden.

  • Section 1202: Capital Gains Exclusion: If you hold qualified small business stock (QSB) in a C Corporation for at least five years, you may be eligible to exclude up to 100% of the capital gains. There are limitations, but this could be a game-changer for eligible sellers.

  • Installment Sales & Deferred Sales Trusts: Spreading payments over time using an installment sale can help defer taxes, while a Deferred Sales Trust can further protect you from buyer risk—though both require careful planning.

  • Employee Stock Ownership Plans (ESOPs): Selling to an ESOP not only allows for tax deferral (under certain rules) but can also reward loyal employees by turning them into owners. This strategy also appeals to sellers who care deeply about the legacy of their business.

  • Charitable Trusts & Gifts: If philanthropy is part of your legacy, consider a charitable remainder trust. You’ll get an income stream, a current tax deduction, and deferred taxes on the business sale.

  • Real Estate Tactics: Own the building too? Real estate strategies like 1031 Exchanges, Delaware Statutory Trusts, or UPREITs can help you reinvest and defer taxes when selling the property tied to your business.

  • Opportunity Zones: By reinvesting gains into a Qualified Opportunity Fund, you may defer—and even reduce—capital gains while supporting economically distressed communities.

  • Hold Until Death? One way to avoid capital gains altogether? Hold the appreciated asset until death to take advantage of the step-up in basis rules under IRC Sec. 1014. 

PLAN EARLY, EXIT SMOOTHLY

Business succession is complex, but you don’t have to go it alone. At Peer Executive Groups, we help owners think long-term, protect their wealth, and plan for what’s next. If you’re preparing for a business transition, contact us today to explore personalized succession planning strategies.

All information is sourced from Simplicity Group LLC

Brenna Conway
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