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TK39
Level 1

I sold my business in 2021

Hello,

My wife and I bought a business in 2007.  We sold it last year.  How should I report the transaction?  Should it be entered in quickbooks or TurboTax-Business?  Any guidance is grately appreciated.

Thanks

 

6 Comments 6
Ethel_A
QuickBooks Team

I sold my business in 2021

Welcome to the Community, @TK39. Let me share the steps to record your sold business.

 

You can record the income as a bank deposit in your QuickBooks Desktop account.

 

Before making a deposit, you need to put the transactions you want to combine into the Undeposited Funds account.

 

You're ready to record the deposit in QuickBooks after you have your bank's deposit slip.

 

Here's how:

 

  1. Select Record Deposits / Make Deposits from the Homepage.
  2. Select the payments you want to combine in the Payments to Deposit window. Then press OK.
  3. Select the account you wish to deposit from the Deposit to option in the Make Deposits window.
  4. Check the total amount of your deposit. Check that the account and payments you've chosen match the deposit slip from your bank. As a guide, use your deposit slip.
  5. The date you made the deposit at your bank should be entered here.
  6. As needed, add a memo.
  7. Select Save & Close when you're finished.

 

I'm also adding this article as your reference in the future in reconciling your accounts: Reconcile an account in QuickBooks Desktop.

 

Let me know if I can be of additional assistance. I'm always around to help.

Rainflurry
Level 13

I sold my business in 2021

@TK39 

 

You really need the assistance of a CPA.  Was it a stock sale or an asset sale?  What is the breakdown of the purchase price?  Was there inventory?  Equipment?  Goodwill?  Non-compete?  Seller financing?  What assets were sold and the basis of those assets and any liabilities assumed and/or seller financing all go into how to record the transaction.  This really isn't the best forum for your question IMO.

TK39
Level 1

I sold my business in 2021

Thanks Rainflurry for getting back to me.  It is a very small business.  A pet grooming salon.  No stock sale, just asset and goodwill sale.  The breakdown of purchase price of 105,000 is:

Asset + equipment = 20,000 We agreed to put 20,000 for all assets and equipments together.

Non-compete agreement = 10,000

Goodwill = 75,000

Expense - Brokerage fee = 10,000

I bought the business on 2007 for 65,000

 

As per instructions for form-8549, I had to combine goodwill and non-compete into class-VI assets.

We had little bit inventory that we didn't charge for.

No seller financing, cash down.  No liability assumed.

 

Rainflurry
Level 13

I sold my business in 2021

@TK39 

 

When you purchased the business, was part of the purchase price allocated to goodwill?  If so, what was your basis in goodwill (cost less amortizaion) when you sold the business?

 

What is your basis (original cost less depreciation taken) in the assets/equipment you sold for $20K?

 

How much inventory was on the books when you sold the business?

 

Also, goodwill is a class VII asset, whereas a non-compete is a class VI asset.

TK39
Level 1

I sold my business in 2021

Hi Rainflurry,

When I purchased, the allocation was:

   Assetes: 10,000

   Non-compete: 5,000

   Goodwill: 50,000

I never amortized the goodwill or non-compete.  I never amortize anything, sorry.

My current basis of assets/equipments is $422.

We had about $100 worth of inventory.

 

Thanks

Rainflurry
Level 13

I sold my business in 2021

@TK39 

 

You need to contact a CPA at this point.  If you never took amortization on the goodwill, you may have to recapture the amortization as if you did take it.  This could cause a large tax liability on the $50K of the goodwill paid on the purchase price.  This is not something to try and navigate yourself.  It will be well worth your time and money.  

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