When we help an owner sell their The UPS Store unit, they often have questions about the final payout amount. Many of them are planning to fund their retirement on the sale of their business, so the bottom line matters a great deal.
Here are the questions we get asked by many sellers:
What about taxes after the sale?
A large part of how much the seller will retain is based on their tax status at the time of the sale. We always recommend that owners consult with their accountants to get a clear picture of how much of their profit will go to taxes after the sale. Some sellers, based on this figure, decide to finance part of the sale themselves, so they can defer taxes for a few years. In some cases, Small Business Association (SBA) lending might also require the seller to hold a note, which will make the profit at closing (and therefore, taxes due) smaller.
Will I have to pay fees at closing?
We get this a lot, since most business owners are familiar with selling a home, which has lots of complex fees due at closing. The good news for sellers of a UPS Store is that when the deal closes, the buyer pays almost all the fees. The buyer pays the transfer fee, the lease assignment, the cost of upgrades to the store’s design, and processing fees. The seller is responsible for only three fees: our broker’s fee, any professional hours from their own attorney, (if they used one), and part of the transaction attorney’s fee. Traditionally, the transaction attorney’s fee, which ranges from $3,000 – $5,000, is split evenly between the seller and buyer.
What about the mailboxes that have been paid in full for the year?
In most of the deals we’ve been a part of, the seller also retained the paid-in-advance mailbox fees. Since mailboxes aren’t seasonal, there’s little disruption to the new owner’s monthly income. That means the buyer doesn’t feel the need to prorate the income at closing (as long as the actual figures are clearly and accurately disclosed).
The store’s equipment leases are also usually transferred to the new owner, so there’s no payoff required by the seller.
If you’re considering selling your The UPS Store franchise, we have thousands of motivated buyers looking for a business just like yours. If we can help you value and list your business, click here to get a complimentary and confidential opinion of value.
