Selling a Business in Florida? Know the Tax Implications Before You Close the Deal

Selling a business is exciting, but it can have serious tax consequences. As a Florida business owner preparing to sell, you may be focused on getting the best price or choosing the right buyer. However, overlooking IRS rules or underestimating your tax liability could result in a surprise bill and potential penalties once the deal is done.

At Ronald Cutler, P.A., we help Florida business owners make smart, strategic moves when exiting a business. As a CPA and former FBI Special Agent investigating tax cases, our Florida tax-IRS attorney provides the legal guidance you need to minimize tax risks. Here’s what you need to know about the tax implications of selling your business.

What Taxes Apply When You Sell a Business in Florida?

Florida may not have a state income tax, but business sales are still subject to federal taxes. The structure of your business and how the sale is arranged will affect your final tax bill.

Common tax considerations include:

• Capital gains tax: Selling business assets or ownership shares for more than your adjusted basis could result in capital gains tax on the profit.
• Depreciation recapture: For certain assets (like equipment or buildings), the IRS may “recapture” depreciation previously claimed, taxing it at higher ordinary income rates.
• Self-employment tax: If you’re a sole proprietor or partner, some of the income from the sale may still be subject to self-employment tax.
• Installment sales: If you accept payments over time, you may be able to spread out your tax liability, but you must follow specific IRS reporting rules.

The IRS treats each component of a business sale (goodwill, inventory, real estate, etc.) differently. Misclassifying assets or failing to allocate the sale properly can lead to audits or disputes.

How to Prepare for Selling Your Florida Business and Reducing Your Tax Burden

The earlier you start tax planning, the more options you’ll have to reduce what you owe. Here’s how to prepare:

• Get a professional valuation to structure the deal based on fair market value.
• Consider an asset versus a stock sale and tax outcomes for each.
• Explore retirement contributions or reinvestment options that can defer taxes.
• Work with an experienced CPA/tax attorney to ensure proper allocation and reporting under IRS Form 8594.
• Keep accurate records of past depreciation, improvements, and capital contributions.

When selling a Florida business, tax mistakes can be costly. A knowledgeable advisor can help you meet deadlines, avoid underpayment penalties, and make the most of available deductions.

Consult Our Experienced Florida Tax-IRS Attorney Before Finalizing Your Sale

Getting the right guidance early on when selling a Florida business can protect your interests and prevent unpleasant surprises from the IRS.

Florida tax-IRS attorney Ronald Cutler, a CPA and former FBI Special Agent investigating tax cases, has spent decades helping business owners navigate major life transitions. Whether you’re retiring, moving on to a new venture, or simply ready to cash out, we help you stay tax compliant every step of the way. To request a consultation, contact our office today.

Sources:

irs.gov/businesses/small-businesses-self-employed/sale-of-a-business

irs.gov/forms-pubs/about-form-8594