Taxes can change what you actually keep from a sale by a lot, so it pays to understand the basics before you negotiate. This is general information to help you ask good questions, not tax advice. Work with a CPA or tax attorney on your situation.
Federal income tax is the big one
Florida does not have a personal state income tax, but federal income tax applies to your gain. Depending on what is sold and how long you've owned it, parts of the gain may be taxed as long-term capital gain and parts as ordinary income.
Asset sale vs. stock sale
In an asset sale, the price is allocated among asset classes (equipment, inventory, goodwill, non-compete and so on), and both sides typically report that allocation to the IRS on Form 8594. The allocation matters: for example, gain on equipment you've depreciated can be "recaptured" as ordinary income, while goodwill is often capital gain. In a stock or membership interest sale, the seller often gets capital gain treatment on the whole sale, though buyers may push for an asset structure. Entity type (C corp, S corp, LLC) matters too.
Florida corporate income tax
If your business is a C corporation, Florida's corporate income tax can apply to gains at the corporate level. S corps and LLCs taxed as partnerships generally pass income through to owners. Ask your CPA how your entity is taxed.
Florida sales tax on tangible assets
Florida sales tax can apply to tangible personal property transferred in a business sale, such as furniture, fixtures and equipment, depending on the circumstances. Goodwill and other intangibles are generally not tangible property. Your CPA or attorney should confirm how this applies to your deal.
Successor liability
Florida law (s. 213.758, Florida Statutes) can make a buyer liable for certain unpaid state taxes of the seller if the buyer doesn't withhold or get clearance. That's why buyers often ask for proof that state taxes are paid, or hold back part of the price until clearance. Staying current on sales tax and reemployment tax filings helps your sale go smoothly.
Local business tax receipts
County and city business tax receipts have their own transfer rules when ownership changes (Miami-Dade, for example, allows transfers on a change of ownership). Check with your county tax collector and city.
Seller financing and installment sales
If you take part of the price over time, installment sale rules may spread some of the gain across years. See seller financing explained.
Real estate
Selling your building has its own tax rules, and a 1031 exchange may be an option for real estate. See selling with real estate.
Questions to bring to your CPA
- How is my entity taxed, and how does that change asset vs. stock sale outcomes?
- How should we allocate the price, and what's my estimated after-tax result?
- What depreciation recapture should I expect?
- Are my state tax filings current, and how do we handle buyer clearance?
- Does seller financing or a 1031 exchange make sense for me?
This guide is general information, not legal, tax or financial advice. Consult your own attorney and CPA.