How to Get Your Tax Returns Ready to Sell Your Business

Selling your business is a complex process, and one of the most time-consuming and detailed steps is due diligence. During this phase, every aspect of your business is examined thoroughly, which can be both lengthy and overwhelming. One often overlooked but critical component of this process is ensuring your tax returns are properly filed and up to date. Neglecting to file or finalize your tax returns can lead to significant delays when you’re ready to sell.

In this article, we’ll outline some key tax-related steps you can take to ensure you're in good standing with the IRS, preventing any hiccups when it’s time to sell.

Key Tips for Getting Your Tax Returns Ready for Sale

1. File Electronically
   E-filing is the fastest and most accurate way to submit your tax returns. Since its inception, the IRS has processed over 1.2 billion e-filed individual returns. Filing electronically can also help expedite any refunds, which are typically issued within 21 days, barring any complications. If you haven’t been e-filing, it’s time to start.
2. Don’t Forget to Sign Your Return
   A valid tax return must be signed. If the IRS receives a return that is unsigned, they will deem it invalid, delaying processing and potentially resulting in late fees. Make sure your return is signed before submission.
3. Wait to Adjust Your Filing Status
   If you need to change your filing status, hold off until you’ve received confirmation from the IRS that your prior year's return has been processed. Amended returns are subject to additional scrutiny and may even be selected for audit, which could complicate things. 
4. Confirm Your Return Has Been Processed
   Before you list your business for sale, double-check that the IRS has processed your tax return and that tax transcripts are available. This ensures there are no issues or discrepancies in your tax filings.

Why This Matters When Selling Your Business

A little proactive follow-up with your accountant or directly with the IRS can save you from potential delays in the closing process of your business sale. Addressing any tax filing issues well in advance can help you avoid complications when due diligence begins.

If you have any questions or need further guidance, don’t hesitate to reach out to your tax representative or contact us for additional assistance.