How to minimize tax implications of business sale?

1 pointcodeismightier1 comment

Let's say that you are selling a website/software/business for a significant amount of money. What should you do to minimize the amount you are taxed? If you incorporate, does it count as capital gains? Can you have a shell, i.e. company A owns company B, company B gets bought and company A pays you dividends slowly? Is this something entrepreneurs need to worry about before starting a business?

View on HN

Depends on your jurisdiction a great deal. Hopefully US-specific answers will come your way soon.

In the UK, if it's incorporated you can just sell your shares. If it's not incorporated and you're self employed, as long as your "trade" isn't "buying and selling Web sites" then if you have a separate site that produces money, you can sell its intellectual property and pay capital gains on it (rather than income). The benefit of this is you only pay 18% tax (now, in prior years it was a lot less if you held the asset for 2 years or more) compared to 20/40% + social security and so forth.

And, yes, if your goal is to sell your enterprise, it's something you need to worry about at some point but not necessarily day one - you gotta focus on actually making some money first :) A good accountant will be able to advise on the structural issues, however.

Reply on news.ycombinator.com