How Beneficial Are Business Brokers for Selling My Sole Proprietor Business
Building a business from the ground up as a sole proprietor can be incredibly challenging. But if you’ve done the work, you might decide that it’s time to sell and move on to your next business venture.
You likely already know that business brokers are essential when it comes to selling larger businesses. But what about sole proprietorships? Here’s a look at how business brokers can make a major difference in the sale process.
They Know How to Find Buyers
Business brokers maintain a network of buyers who are eager to purchase businesses. When it comes time to sell yours, your broker will connect you with enthusiastic potential buyers.
What if you already have a buyer in mind? You’ll still benefit from working with a broker because they help with more than just finding buyers.
They’re Expert Negotiators
Since you’ve worked so hard to build up your sole proprietorship, handling the negotiations yourself isn’t a great idea.
Negotiating a sale price for a business isn’t like haggling at a flea market. Business brokers sell businesses day in and day out, so they’re well-versed in the difficult art of negotiation. They’re also familiar with changing trends in your industry, so they will be able to tell you whether an offer is worth taking.
They Can Help You Minimize Tax Liability
Most business owners sell with the goal of getting as much profit from the sale as possible. However, the more profit a sale generates, the more you’ll owe in capital gains tax.
The way a sale is structured can make a dramatic difference in the amount of tax you owe, and business brokers can help you design a deal structure that keeps your tax liability as low as possible.
Tax code is difficult for most people to understand, and the fact that it’s constantly changing doesn’t make it any easier. Brokers keep track of changes in tax code and can use that knowledge to execute successful sales.
They Save You Time
If you’re going through the process of selling your business while you’re also running it, you may have already found that it’s a challenge to manage both. This is particularly true during the due diligence process, where the buyer can request many types of documentation:
Bank statements from the past 3 to 5 years
Tax returns from the past 3 to 5 years
Financial statements from the past 3 to 5 years
Any relevant leases or contracts
Insurance policies
Employee handbooks and official protocols
Business brokers can help you find and compile this information ahead of the due diligence process. You can trust them to handle the logistics of the sale so you can dedicate your time to your business.
Are Business Brokers Right for You?
Selling your sole proprietor business is a major event, and it’s something you need to plan with caution. When you work with a business broker, you have a professional on your side to take charge of finding a suitable buyer, getting a fair sale price, minimizing your tax liability, and ultimately, saving you time.
