After 20 years, why doesn't the financial service industry model of commission not work anymore?

Question

Does equity mean anything when you sell you business?

Answer 1

I believe that it is because so many more people have become savvy about investing and are wanting to pay smaller fees to make those investments. The easiest way for companies to cut fees is by changing from paying their financial advisors a percentage of the investment to paying salaries. The commission can then be removed as part of the fees and charged more indirectly. I also think that investors being able to invest over the internet has put more pressure on the investment firms to have to compete in much the same way.

As far as equity from selling a business, it completely depends on whether the business is incorporated or not. If you sell a corporation the proceeds have to be distributed to all of the stakeholders in the corporation. If the business is a sole proprietorship, it works the same as selling any other business property, like a rental house. You will pay any debts of the business, and when you file taxes, you only pay taxes on the gain. The sale of an unincorporated business is included on form 4797 and Schedule D of your personal income tax return. A corporation will file its own special forms and return.

This is a very simplified answer. You should talk to your tax advisor for the full tax implications and, if necessary, a lawyer for any legal matters.