Biden Tax Hikes: Why Business Owners Must Act Fast

Higher taxes are coming in 2022! And not just slightly higher, but massively so!

The Biden administration has proposed increasing the capital gains tax rate from 23.8% to 43.4% for earnings over $1 million. It is unclear whether such a law would come into effect in 2022 or be applied retroactively. However, the former is the likely expected outcome.

What this means is if you are a Business Owner who was thinking about selling your business in the next couple of years, you should really consider accelerating your timeline. With the new tax changes your after-tax proceeds in a sale could be as much as 30% lower! For most Business Owners this will equate to several millions of dollars of lost proceeds. You can run the math but for most Business Owners it will take multiple years of operating their businesses to make up the differential in lost value. Meaning you’ve pushed your retirement out several years and have no more savings to show for it.

Many Business Owners have been doing this calculus and coming to this realization. Seller actively has picked up dramatically over the last few months, with the potential Biden tax changes being cited as the key motivator for the decision to pursue a sale.

But its not too late! There still time is time. Business sales can take anywhere from 3 to 6 months. If you act fast , completing a sale before year-end is very realistic. However, the clock is ticking and you need to act fast!