Each year I learn about disasters that occur when my clients or others either buy or start a business. Why do these disasters happen? Many times the problems start because of consulting the attorney and the banker, but not consulting their tax professional. Why is it necessary to consult a tax professional when starting or buying a business? With good planning and discussion tax issues can be avoided and tax liabilities can be minimized by working with a tax professional even before buying or starting a business. If you wait until tax season to inform your tax professional, you could then be facing a large tax bill. And, the ability to take advantage of any additional tax deductions for the start-up year is greatly reduced.
When you consider buying a business, there are many tax and accounting questions that have to be asked. You need to consult tax professional not working for the current business owner. This is even more necessary if you have been working in the accounting department for the company you are looking to buy.
Some points about buying a business you need to consider are:
- What type of entity is the business you are looking to buy?
- If the business is a corporation, will I be buying the stock of the corporation or the assets of the corporation?
- What type of business entity is best for my situation?
These are only a few of the questions a prospective business owner must get answered before signing any papers to purchase a business. The answer to these and many other questions will determine how the buying and operating of the business will affect your tax situation.
I highly recommend scheduling an appointment with an Enrolled Agent, like myself for a Free Business Discovery Session, when you consider either starting a business or buying a business. By consulting with me now, you will save on tax payments and tax headaches later.