The Tax Implications of Selling a Business in Florida

One of the most common questions Ryan Winter hears from St. Augustine business owners considering a sale is: “How much of the sale price will I actually keep?” The answer depends heavily on how the deal is structured, what assets are being sold, and how the proceeds are taxed at the federal level. While Florida has no state income tax, a significant advantage for sellers, federal taxes on a business sale can still be substantial. Here’s what every St. Augustine business owner should understand.

Note: Ryan Winter is a business broker, not a tax attorney or CPA. This article is for general informational purposes. Always consult a qualified tax professional regarding your specific situation.

Florida’s No State Income Tax Advantage

Florida does not impose a state income tax on individuals, which means Florida business owners selling their businesses are not subject to state capital gains taxes. This is a meaningful advantage compared to sellers in states like California (13.3% state capital gains rate) or New York (up to 10.9%). For business owners who have relocated to Florida specifically for this benefit, the savings can be considerable.

Federal Capital Gains Tax

At the federal level, the proceeds from a business sale are typically subject to capital gains tax. Assets held for more than one year qualify for long-term capital gains rates, which currently range from 0% to 20% depending on your total taxable income. Most business sellers fall into the 15% or 20% bracket. Some portion of the sale may also be subject to depreciation recapture, which is taxed as ordinary income at rates up to 37%.

Asset Sale vs. Stock Sale

How your business is structured, and how the deal is structured, significantly affects your tax outcome. In an asset sale, each category of assets (equipment, inventory, goodwill, non-compete agreements) is taxed differently. In a stock sale, the entire transaction is typically taxed as capital gains. Buyers generally prefer asset sales (for depreciation benefits), while sellers often prefer stock sales (for tax simplicity). Ryan Winter works with sellers and their CPAs to evaluate the tax implications of each structure before agreeing to deal terms.

Installment Sales Can Spread Your Tax Burden

One strategy some St. Augustine business sellers use is accepting part of the sale price in the form of a seller note, receiving payments over time rather than all at once. This installment sale approach can spread the tax liability across multiple years, potentially keeping you in a lower bracket each year. It also carries risk (if the buyer defaults), so it requires careful consideration and legal documentation.

Plan Ahead, Tax Strategy Starts Before You List

The most important tax planning insight Ryan Winter shares with St. Augustine sellers is this: don’t wait until you have a signed letter of intent to think about taxes. By that point, the deal structure is largely set. Start the conversation with your CPA and financial advisor early, ideally before you even list the business, so you can structure the deal in a way that maximizes what you keep. Call Ryan at 904-735-8994 or visit ryancwinter.com/contact.

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Related Reading

• What Is a Letter of Intent When Selling a Business in Florida?
• What Is Due Diligence When Selling a Business in Florida?
• How to Sell a Business Without a Broker in Florida

• Category: Northeast Florida, Selling a Business