Tips for placing a value on your business

There are several reasons why you should know the value of your business. if you are planning to sell your business, the general rule is that you should sell it for fair market value. In many instances the term "fair market value" is somewhat ambiguous. In the simplest sense, fair market value is what a willing buyer would pay a willing seller, with each party knowing all the pertinent facts.

There are several acceptable methods for determining the fair market value of a company. The most common three methods use (1) the value of the company's assets, (2) the earning power of the company, or (3) the stock value, assuming the company is a corporation. When determining the value of the corporation's stock, you must research the sale of stock for a substantially similar business. If you have been operating the company for many years, you have built up a reputation for providing good service. This goodwill is a valuable asset and should play an important role in determining a fair asking price for your business.

The fair market value of the business is also relevant if you plan to transfer the company to a family member. If the transfer is for less than fair market value, the IRS considers the transaction as part sale and part gift. Inter-family transfers are more closely scrutinized, making an accurate valuation even more important.

Tax Tips Small Business

  • Automobile Expenses

    Which is better - deducting the standard mileage rate or actual expenses?

    With the fluctuating cost of gas, it might be a good idea to revisit which tax deduction is the most beneficial - claiming 54.5 cents per mile (2018) or your actual vehicle expenses. Claiming the standard mileage rate is easier. All you have to do is keep track of your business miles and multiply them by the current rate. In addition to the standard mileage rate, you may also deduct the costs for parking and tolls. Plus, if you are self-employed, you can deduct the interest paid on your car loan.

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Small Business Quick Tip

  • Business Mileage Rate

    Instead of deducting the actual expenses for the business use of your vehicle, opt for the standard mileage rate. In 2016, you can deduct 54 cents for each business mile you drive.
Saturday, 15th December 2018
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Tax Tips Personal

  • Direct Deposit of Your Tax Refund

    More options are available to you

    The IRS is now allowing taxpayers who are due a tax refund the option of having that refund split up and deposited in up to three different bank accounts.

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Personal Quick Tip

  • Organized Appointment

    Go to your tax appointment well organized. Have all your income statements such as W-2s and 1099s separate from your expenses. Make sure you have all the proper social security numbers for dependents, as well as their names as they appear on their social security card. Careful organization will save you time come tax season.