Selling your content marketing agency can be one of the most rewarding decisions of your career, but it’s important to remember that taxes can have a significant impact on your final proceeds. Understanding the key factors that affect taxes on selling a content marketing agency ensures you keep more of what you’ve worked hard to build.

This guide will walk you through what to expect from a tax perspective, how deal structure affects your tax bill, and planning opportunities that can help you reduce surprises and optimize your after-tax outcome.

Why Tax Planning Matters for Sellers

Many founders focus primarily on valuation and the sale price itself. While securing a strong offer is critical, the amount you keep after taxes is what really counts.

Depending on the structure of the deal, your tax obligations could vary dramatically, with combined federal and state taxes reducing proceeds by 20 to 50 percent or more. Careful planning before and during the sale process can help minimize this impact and ensure you exit on favorable terms.

Asset Sale vs. Stock Sale: Why Structure Matters

The most significant factor affecting taxes on selling a content marketing agency is whether the transaction is structured as an asset sale or a stock sale.

Asset Sale
In an asset sale, you sell the individual assets of the business (client contracts, intellectual property, equipment, goodwill). Buyers generally prefer this structure because they can “step up” the value of assets for depreciation and avoid inheriting liabilities.

From a tax perspective, an asset sale means different parts of the purchase price are taxed differently:

  • Goodwill and intangible assets are taxed at long-term capital gains rates.

  • Equipment or furniture may result in depreciation recapture taxed at higher ordinary income rates.

  • Consulting agreements, non-compete payments, or earn-outs tied to your post-sale work may also be taxed as ordinary income.

Stock Sale
In a stock sale, you sell your ownership interest in the company itself (e.g., shares of an S-corporation, C-corporation, or membership interests in an LLC).

Buyers are less likely to prefer stock sales due to potential liabilities, but this structure is generally more favorable for sellers because:

  • The entire purchase price is typically taxed as long-term capital gain.

  • You may qualify for additional tax benefits, depending on the entity type.

The structure negotiated will determine how your sale proceeds are taxed and therefore how much you take home after closing.

Understanding Capital Gains vs. Ordinary Income Rates

In most cases, sellers want the proceeds from their sale to qualify for long-term capital gains treatment. Capital gains tax rates are lower than ordinary income rates and can significantly improve your after-tax outcome.

Current federal rates:

  • Long-term capital gains: 0%, 15%, or 20%, depending on your total income

  • Net Investment Income Tax (NIIT): An additional 3.8% may apply for higher earners

In contrast, ordinary income rates can reach up to 37% federally, plus applicable state taxes. Payments taxed as ordinary income (such as consulting agreements or non-compete payments) will therefore reduce your net proceeds more significantly.

State and Local Taxes

Where you live matters. State and local taxes can add significantly to your total tax bill.

For example:

  • California’s top income tax rate exceeds 13%

  • New York’s combined state and city taxes are also substantial

  • In contrast, Florida and Texas do not impose state income tax on individuals

If you’re considering relocating before a sale, consult a tax advisor early. Some states apply residency rules that require careful planning well in advance of closing.

Purchase Price Allocation

In an asset sale, the purchase price must be allocated among various asset classes. This allocation determines how much is taxed at capital gains rates versus ordinary income rates.

Strategic allocation can reduce your overall tax burden. For example:

  • Allocating more of the purchase price to goodwill (capital gain treatment)

  • Minimizing allocations to consulting agreements or equipment subject to depreciation recapture (ordinary income treatment)

This is typically negotiated with the buyer, so working with advisors who understand this dynamic can make a substantial difference.

Earn-Outs and Installment Sales

If part of your purchase price is paid through an earn-out or installments over time, the tax implications can become more complex.

Earn-outs may be taxed as capital gains or ordinary income depending on how they are structured. For example:

  • An earn-out tied purely to financial performance may qualify as capital gain.

  • An earn-out contingent on your continued involvement (e.g., consulting services) may be taxed as ordinary income.

Installment sales allow you to spread your tax liability over multiple years by recognizing gain as payments are received. This can help manage your overall tax bracket in a given year.

Entity Type and QSBS (Qualified Small Business Stock) Benefits

Your legal entity structure also affects taxation:

  • If your agency is structured as an S-corporation or LLC, sale proceeds generally flow directly to you and are taxed at capital gains rates (with potential ordinary income for specific allocations).

  • If your agency is a C-corporation and you meet specific requirements, you may qualify for the Qualified Small Business Stock (QSBS) exclusion, which allows you to exclude up to $10 million (or 10 times your basis) of gain from federal taxes.

QSBS treatment requires advance planning and holding periods, so it’s worth evaluating this option early if you’re a C-corp founder.

Planning Ahead to Minimize Taxes

The good news is that thoughtful planning can help reduce taxes on selling a content marketing agency. Consider taking these steps:

  • Engage a tax advisor early, ideally at least six to 12 months before you begin the sale process.

  • Review your entity structure and evaluate opportunities like QSBS.

  • Document all potential add-backs and normalizations in your financials.

  • Negotiate purchase price allocation carefully.

  • Explore residency planning if you’re in a high-tax state.

  • Consider using trusts or charitable giving strategies if aligned with your goals.

Final Thoughts

While a successful sale starts with a great business and a strong offer, your after-tax outcome depends heavily on deal structure, entity type, residency, and planning. Understanding taxes on selling a content marketing agency gives you a clearer path to maximize your net proceeds and exit on your terms.

At Merge, we help founders not only navigate the sale process but also connect them with the right advisors to optimize their after-tax results. If you’re thinking about selling, let’s talk — we’re happy to help you prepare, plan, and exit with confidence.