When it comes to selling your influencer business, it’s not just about what the buyer offers — it’s about what you keep after taxes.

At Merge, we help founders think holistically about their exit, including how tax planning for selling an influencer business can improve their outcome and minimize surprises after closing.

Here’s a practical guide to understanding how taxes impact your sale and how to plan ahead so you can maximize net proceeds.

Why Tax Planning Matters

Taxes on a business sale can reduce your net proceeds by 20%–40% or more, depending on structure, location, and deal terms.

The earlier you begin tax planning, the more options you have to:

  • Optimize deal structure

  • Reduce your overall tax burden

  • Time your sale efficiently

  • Avoid unnecessary surprises at closing

Proactive planning is a key part of a successful exit strategy.

1. Asset Sale vs. Stock Sale: Different Tax Outcomes

One of the most significant tax decisions is deal structure.

Asset Sale

In an asset sale, you sell the individual assets of the business (e.g., intellectual property, contracts, content library) but retain ownership of the entity itself.

For sellers, this can result in a mixed tax treatment:

  • Some proceeds may be taxed at favorable long-term capital gains rates (typically 15%–20% federally plus state taxes)

  • Other portions (e.g., payments for non-compete agreements or depreciation recapture) may be taxed as ordinary income at higher rates

Most buyers prefer asset sales because they reduce their liability exposure.

Stock Sale

In a stock sale, the buyer purchases your ownership interest in the business entity itself.

This structure is generally more favorable for sellers because:

  • The entire gain may be taxed as long-term capital gains

  • There’s usually simpler tax reporting for the seller

However, stock sales are less common for small businesses unless the business is well-structured and has a clean history.

2. Capital Gains vs. Ordinary Income Tax Treatment

Your goal as a seller is typically to have as much of the sale proceeds as possible taxed as long-term capital gains, which are taxed at lower rates than ordinary income.

Careful negotiation of deal terms and allocation of the purchase price can help maximize capital gains treatment.

3. Purchase Price Allocation in Asset Sales

In an asset sale, how the purchase price is allocated across different asset classes affects how it’s taxed.

Buyers and sellers must agree on an allocation for:

  • Goodwill and intangible assets (usually taxed as capital gains)

  • Tangible assets (may involve depreciation recapture taxed as ordinary income)

  • Non-compete agreements (typically taxed as ordinary income)

Work with a tax advisor to negotiate a purchase price allocation that minimizes your tax burden while remaining acceptable to the buyer.

4. State and Local Tax Considerations

Your state of residence — and the state where your business operates — can significantly impact your net proceeds.

For example:

  • California and New York tax capital gains as ordinary income at relatively high rates

  • Florida and Texas have no state income tax, potentially reducing your tax bill significantly

If you operate across multiple states, additional complexities may apply, and nexus issues could arise.

5. Installment Sales and Earn-outs

Some deals include deferred payments, such as:

  • Installment sales, where you receive payments over time, potentially reducing your tax rate by spreading income across multiple tax years

  • Earn-outs, which tie future payments to business performance after the sale

Each of these structures carries unique tax implications and should be reviewed carefully with your tax advisor.

6. Qualified Small Business Stock (QSBS) Exclusion

If your influencer business is organized as a C corporation and meets certain requirements, you may qualify for the QSBS exclusion under Section 1202 of the Internal Revenue Code.

This exclusion can allow you to avoid federal capital gains taxes on up to $10 million of gain (or 10 times your basis, whichever is greater) if:

  • You’ve held the stock for at least five years

  • The company meets active business requirements

  • Other conditions apply

Not all influencer businesses will qualify, but it’s worth exploring if you structured your business as a C corporation early on.

7. International Tax Issues

If your influencer business serves international clients or generates income abroad, cross-border tax rules could apply.

This might include:

  • Foreign tax credits or deductions

  • Withholding tax considerations

  • VAT (value-added tax) obligations for services sold in certain countries

Work with an international tax advisor if your business has global revenue streams.

8. Basis Documentation

Your tax liability depends on your “basis” in the business — essentially, what you invested over time.

Document your:

  • Startup costs

  • Additional capital contributions

  • Business-related expenses that weren’t deducted previously

A higher basis reduces taxable gain, so keeping thorough records can save you significant money at sale.

9. Post-sale Tax and Wealth Planning

Tax planning shouldn’t end at closing. Once you receive sale proceeds, consider:

  • Timing other income or deductions to minimize overall tax liability

  • Contributing to tax-advantaged retirement accounts

  • Charitable giving strategies that reduce taxable income

  • Estate planning to manage future wealth transfer efficiently

A holistic approach ensures you protect your net proceeds beyond the transaction itself.

Why Work with Advisors

At Merge, we help founders understand the financial and tax implications of their exit so they can plan ahead properly.

We recommend working closely with a qualified CPA or tax attorney to:

  • Assess likely tax exposure early in the process

  • Structure the deal to maximize after-tax proceeds

  • Prepare documentation properly for diligence and closing

An experienced M&A advisor plus a tax professional is the best way to protect your financial interests.

Final Thoughts

Tax planning for selling an influencer business is essential to maximizing your net outcome.

By understanding deal structure implications, purchase price allocation, capital gains treatment, state tax differences, installment payments, international issues, and post-sale planning opportunities, you’ll reduce surprises and keep more of your hard-earned proceeds.

At Merge, we guide founders through this process thoughtfully so they can exit confidently and move into their next chapter with peace of mind.