2 tax strategies that can save you six figures on your first deal

Most first-time buyers miss these completely

Ben Kelly
December 23, 2025

Taxes might be the least exciting part of buying a business.

But get this right, and you could save tens (or even hundreds) of thousands of dollars.

Today I’ll break down the two most important tax strategies for acquisition entrepreneurs: deal structure and entity structure.

When you buy a business, the purchase price gets split between two categories:

Goodwill: intangible value like brand reputation, customer relationships, and intellectual property
Assets: physical items like equipment, vehicles, inventory, and real estate

Here’s why this matters 👇

Assets depreciate over time, which creates tax deductions that lower your taxable income every year.

And goodwill doesn’t depreciate (or depreciates much more slowly), which means less tax benefit.

So - you want as much of the purchase price allocated to assets as possible.

For example…

Let’s say you’re buying a business for $1M.

Deal A: $700K goodwill, $300K assets

Deal B: $300K goodwill, $700K assets

Deal B saves you significantly more in taxes over the life of the business because you’re depreciating $700K instead of $300K.

This is something you negotiate with the seller during the purchase agreement.

Most buyers start with a simple LLC for their first deal, and that’s fine!

But once you own multiple businesses, you’ll want a more sophisticated setup.

Here are some potential ideas you’ll want to think through:

Create an LLC holding company that owns 100% of your operating businesses (each also an LLC).

Profits from all your businesses flow up to the holding company, then you can elect for that holding company to be taxed as an S-Corp.

You pay yourself a reasonable salary (which is tax-deductible as a business expense).

The remaining profit gets distributed to you at a lower tax rate (typically 5-7% less than ordinary income).

You can write off legitimate business expenses like equipment, office space, and travel.

This structure takes more paperwork, but the tax savings add up fast when you’re dealing with six or seven figures in profit.

You don’t have to be a big private equity firm to start optimizing your taxes.

Regular people buying small businesses can use these same strategies to keep more of what they earn.

Work with a CPA who understands acquisitions, and make sure these conversations happen before you sign anything.

Now, if you’re ready to start looking at deals…

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Onward,

— Ben Kelly