The Tax Tip That Could Save You Hundreds of Thousands of Dollars

A perfectly legal way for small business owners and solopreneuers to slash their tax bills

 
Written by Bryan Borzykowski for MoneySense

Every small business owner has an opinion about whether to remain a sole proprietor or to incorporate, but here’s a situation in which you might want to do the latter: You’re selling your company.

Why does it matter? Because someone selling an incorporated business can keep $813,000 of the sale proceeds under the lifetime capital gains exemption. Anything above that amount is subject to capital gains tax, but anything below that is yours, says Dorothy Keating, a St. John’s€“based accountant with Noseworthy Chapman. Otherwise, a sole proprietor selling assets, such as client lists, will have the entire proceeds taxed.

The bottom line: Making use of the lifetime capital gains exemption can save you hundreds of thousands of dollars.

MORE ON TAXATION:

What other overlooked tax-saving strategies and measures should business owners take advantage of? Let us know by commenting below.

Originally appeared on PROFITguide.com

Comments are closed.