How Much Will Uncle Sam Benefit from the Sale of Your Business?

Last week, we talked about the Top 3 Costly Mistakes in Transitioning Your Business. Notice who didn’t make that list? Uncle Sam. Why? Because if your business can’t even attract a buyer at a strong price, taxes don’t matter yet. (If you missed that article, I’d recommend starting there first.)

But let’s assume your business is attractive, buyers are interested, and a successful sale is in your future. Great news! Now it’s time to face a different challenge: tax planning.

And here’s what NOT to do:

❌ 1. Don’t Wing It

Guessing your tax bill—or worse, adding it onto the asking price—is a fast way to scare off buyers. We’ve seen it happen.

Here’s why this approach backfires:

You could lose real buyers. No one wants to overpay because you “guesstimated” Uncle Sam’s cut.
You might miss a negotiating advantage. Smart planning can create win-win tax strategies that benefit both you and the buyer.
You may be wrong altogether. Too many owners wrongly assume taxes will wipe out their retirement dreams. In reality, with the right tools, you might keep far more than you think.
Knowledge really is power. At minimum, you should know your tax picture under different scenarios. Only then can you solve the problem instead of letting fear hold you back.

❌ 2. Don’t Wait Until the Eleventh Hour

Good tax planning isn’t last-minute. Some strategies need years to work in your favor.

Take this example: there’s a tax law that lets you exclude the greater of $10 million or 10 times your basis when you sell. Even better, with careful planning, you could multiply that exemption for your family.

But—here’s the kicker—you have to qualify at least five years in advance. That means you need to start strategizing six or seven years before you plan to sell.

Waiting until you’re ready to sign on the dotted line? Too late.

❌ 3. Don’t Overlook Estate Planning

If your family could face estate taxes one day, the smartest time to act is before you sell your business.

And timing is everything. Taxes are historically low right now, but who knows how long that will last? (Just take a peek at the U.S. Debt Clock if you’re curious about where things are headed.)

Here’s a powerful example:

Suppose your business is worth $30 million. With the right planning, you might transfer it into a trust using only $15 million of your lifetime gifting exemption. That means the business continues to grow outside your estate—and avoids a potential 40% estate tax later. Translation: your family could save $6 million.

That opportunity disappears if you wait until after the sale.

The Bottom Line

Selling your business is one of the biggest financial events of your life. The truth? You probably don’t know what you don’t know when it comes to tax strategy—and that’s okay. Most business owners (and even many CPAs) don’t.

But here’s what you do need: a skilled team who can quarterback the process, spot opportunities, and keep Uncle Sam from taking more than his fair share. That’s where we come in.

You’ve worked too hard to let taxes be the elephant in the room. With the right plan, you can sell confidently, protect your wealth, and set yourself—and your family—up for the future.