# Thinking of selling a website need help!



## marina628 (Dec 14, 2010)

Hello everyone ,
I have a web business and today I was approached by a huge company from UK to buy one of my established websites .They clearly did their homework before coming to me with an offer.Anyway here is the stats ,the site earns an average of $25,000 gross before taxes and they have made me an offer of $560,000.I feel the price is fair but that will mean we lose $25,000 gross a month revenue.The Business currently owes me $130,000 which is being repaid $7000 a month so it could pay me off immediately cutting that monthly bill .This extra $560,000 on the books will effectively be all taxable income so trying to figure out after taxes if it will be a good deal for me to take.
Of course it means we will have more to invest ,we are not in a position where we need the cash but offers like this do not come around often .

Marina


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## MoneyGal (Apr 24, 2009)

If the sale is essentially goodwill (i.e., that is what is being purchased), you should be able to have it treated for tax purposes essentially like a capital gain - not like ordinary income. 

The tax treatment of the sale of an unincorporated business with no tangible assets (so what is changing hands is ownership of the domain, customer lists, "brand" and other facets of goodwill) is not that complex but it is a lot to type out. I'm curious, though, where you get the idea that the proceeds are all taxable as ordinary income.


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## m3s (Apr 3, 2010)

Congrats! But, why would you sell as long as you expected to make this much for another 5+ years? Depends how much work the site is I guess and how long you expect the gravy train to last

I'd be making an iPoker app or something


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## marina628 (Dec 14, 2010)

This issue is I would like to slow down a bit and only reason I would consider to sell it ,it is about 20% of my work load.Money gal I have no clue on tax stuff and My accountant is on vacation until July 5 so I thought maybe somebody here would have some insight.This particular website is technically owned by me ($9.99 at Godaddy plus all my time to build it for 4 years.)but the revenue has been going to my corporation since 2007 .


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## FrugalTrader (Oct 13, 2008)

Marina, are you selling the corporation or the assets within a corporation? If the website that you are selling is under its own corporation, then you may be eligible for the capital gains exemption. But as others suggested, it is definitely best to consult your accountant.


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## MoreMiles (Apr 20, 2011)

UK, eh? 

You sure you don't want to meet them somewhere in-between? Like Isle of Man http://en.wikipedia.org/wiki/Isle_of_Man#Economy 

Do you know major websites like Baidu all registered their business in Cayman Island? http://www.wikinvest.com/stock/Baidu.com_(BIDU)/Cayman Islands Taxation

Your business is a web site too? Just like Baidu?


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## HaroldCrump (Jun 10, 2009)

MoreMiles said:


> Do you know major websites like Baidu all registered their business in Cayman Island?


It is amazing how so many "interesting" businesses gravitate towards the Caymans.
Having lived & worked there briefly, I know


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## Oldroe (Sep 18, 2009)

I think they are trying to steal it. 300k/year gross and only paying you 565k. I think 3* gross, 900k would be closer to the final # start about 1.2 million.


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## Plugging Along (Jan 3, 2011)

Congrats on even getting an offer! That's quite an accomplishment. 

You will definately want to talk to your accountant. Depending on how you are set up (if you are incorporated), you will most likely be eligible for a small business capitals gains exemption of $500K (I think this may have gone up), for both you and hubby.

In terms of selling or not, I think that really depends on what you planning to do with it. I think the thing with being your own business owner is understanding when you want to exit.


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## MoneyGal (Apr 24, 2009)

Plugging Along said:


> You will definately want to talk to your accountant. Depending on how you are set up (if you are incorporated), you will most likely be eligible for a small business capitals gains exemption of $500K (I think this may have gone up), for both you and hubby.


When there is significant goodwill in a business, sometimes it is more tax-effective (surprisingly) to structure the sale as an asset sale, not a capital gain; as this can result in less tax payable. Here is a very basic article on asset sales versus capital gains with the sale of an incorporated business: 

http://www.kpmg.com/Ca/en/IssuesAnd...771_ShareSaleOwners_ArticleReprint_v1_WEB.pdf


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## Plugging Along (Jan 3, 2011)

MG: I definately can't dispute what you said. I just know when one of my siblings sold his business which was substantially good will, in the IT sector, he used the small business capital gains exemption. I actually thought that the first $500K was completely tax free, but honestly, couldn't tell you. I know you know more about tax than I do, so I will leave it up to the OP to find out more.


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## marina628 (Dec 14, 2010)

Just wanted to say we own over 300 websites this is just ONE of the bigger ones.We are incorporated and 100% revenue from this site goes into the corporation the domain itself was registered by me in the early days which i assumed it will be worth 11 dollars one day when i sold it lol.I am not selling my business just this one website has gotten quite a bit of attention lately and I was not even looking for an offer.Obviously I am not going to take the first offer but I need to understand the tax etc.My accountant is away and I absolutely cant talk to her until July 5 and I did not want to wait til then to get some answers.I have 30 days to decide these things do not happen quickly.


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## FrugalTrader (Oct 13, 2008)

Thanks for the information MG. From the article, it says that gains on Goodwill can be placed in a Capital Dividends account (CDA) and distributed to the shareholders tax free. Say in this case that Marina started the site from scratch which has resulted in $500k Goodwill, does that mean that $500k can be distributed to corporate shareholders tax free via CDA? Almost sounds too good to be true.


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## MoneyGal (Apr 24, 2009)

I don't know enough about the specific situation here to comment about what she can or cannot do. 

My point was just that it is worth exploring all the options for structuring the sale of a business when goodwill is a significant portion of what is being sold - you have options which may be more beneficial ultimately than using the capital gains exemption for eligible shares. I'm sure her accountant will know what the best scenario is.


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## 72camaross (Apr 26, 2010)

Can you teach me how to build websites that gross 25k a month?  Even being an IT guy I wouldn't know how to do that!
That's amazing to me! Congrats and I hope you figure out the tax situation.


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## marina628 (Dec 14, 2010)

I started the site from scratch ,it took me 5 months to earn my first $100.00 .When i first started earning money i was paid into paypal and i would spend all the revenue buying ads for the site and services like articles etc.Once the site reached a consistent $4000 a month I incorporated and started directing the revenue into the business.My husband owns 51% of business and i own 49% .I have a site in same niche that is earning more than $25,000 a month ,the potential buyer knows this but they know it would take 2-3 million to get the #1 site.
72camaross for $300,000 I will teach you to build a site earning $25,000 a month haha!Payment up front


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## HaroldCrump (Jun 10, 2009)

marina628 said:


> I started the site from scratch ,it took me 5 months to earn my first $100.00 .When i first started earning money i was paid into paypal and i would spend all the revenue buying ads for the site and services like articles etc.Once the site reached a consistent $4000
> 
> I have a site in same niche that is earning more than $25,000 a month


Very commendable indeed!
Esp. when we see behemoth companies like Yellow Media struggling to generate revenue from online advertising and content.
Care to share the URL of the site(s)?
I'm sure many of us are intrigued.


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## 72camaross (Apr 26, 2010)

marina628 said:


> I started the site from scratch ,it took me 5 months to earn my first $100.00 .When i first started earning money i was paid into paypal and i would spend all the revenue buying ads for the site and services like articles etc.Once the site reached a consistent $4000 a month I incorporated and started directing the revenue into the business.My husband owns 51% of business and i own 49% .I have a site in same niche that is earning more than $25,000 a month ,the potential buyer knows this but they know it would take 2-3 million to get the #1 site.
> 72camaross for $300,000 I will teach you to build a site earning $25,000 a month haha!Payment up front


That is great seems like a good deal to me! Hang on, I think someone will buy my soul for that much... 
I wish I had your insight and obviously talent! Congrats.

Yes we are curious about the sites!


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## Four Pillars (Apr 5, 2009)

HaroldCrump said:


> Very commendable indeed!
> Esp. when we see behemoth companies like Yellow Media struggling to generate revenue from online advertising and content.
> Care to share the URL of the site(s)?
> I'm sure many of us are intrigued.


I'm intrigued as well.

Congrats on building up such a great business.


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## marina628 (Dec 14, 2010)

When I have a signed deal and site is Sold I will disclose


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## 72camaross (Apr 26, 2010)

Fair enough.
So when I need a job can I just send you my resume?? haha


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## marina628 (Dec 14, 2010)

I have been doing this for 8 years now ,one of my main niches is Audiobooks and we run massive PPC campaigns .I have worked with a large group for about 6 years and way they work once a person buys a book from me I get 35% of all their purchases .We also work with audible and amazon and in another Niche I was voted in top 50 of 'Powerful affiliates' and this was published in a major magazine.
The internet marketing is my second career , my first ended after a car accident that left me in a wheelchair so the worst thing that happened in my life was actually the best thing that happened in my life.
There are many great family friendly niches out there that are profitable ,Finance and Health (NOT TO BE CONFUSED WITH PRESCRIPTION SITES) are probably two you can start at ground zero today and make $100,000 in the first year.
I am sitting on about 200 old blogs 4-7 years old that I was going to sell but now plan to develop ,I am confident if i sell this time sucker of a site I can earn the 25k a month or more when i clean the dust off my old sites.I have pr6 sites just sitting not even updated since 2008 lol


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## marina628 (Dec 14, 2010)

We had 12 Full time employees during our building days , now we kept the best 4 and give them good bonuses and raises.If you know html ,css ,php, Dreamweaver etc we are always accepting resumes


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## kcowan (Jul 1, 2010)

The bidder is probably not aware of the current earnings from the site. I don't think you need an accountant. I think you need a negotiator. In 2 years, with working one day a week, you will earn the same amount. 

I would give a short reply saying that you are currently earning $300k a year for one day a week of work so their bid is inadequate. Good luck!


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## brad (May 22, 2009)

Marina your successes are inspiring, but sometimes I worry that many of us on the forum reveal too much about our finances online; you can pretty much bet that there are predators monitoring these forums, and while I'm sure it's pretty well locked down a dedicated hacker might be able to find a way to get IP addresses and it's only a short step from that to getting your street address and other information that could be used either for identity theft or for home burglaries.

I wouldn't be paranoid about it, but at the same time I think it's wise to be cautious. There are people on this forum with high net worth and income, making them very attractive targets for criminals. I just think we should think carefully about how much we reveal.


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## Four Pillars (Apr 5, 2009)

kcowan said:


> The bidder is probably not aware of the current earnings from the site. I don't think you need an accountant. I think you need a negotiator. In 2 years, with working one day a week, you will earn the same amount.
> 
> I would give a short reply saying that you are currently earning $300k a year for one day a week of work so their bid is inadequate. Good luck!


The site earns $300k gross. Given that she spends time on the site and has employees, I think it's safe to say the net is a bit less.

I don't think their offer is unfair at all.


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## MoneyGal (Apr 24, 2009)

kcowan said:


> I don't think you need an accountant. I think you need a negotiator.


She needs an accountant and/or lawyer to structure the sale if she sells. The selling price is a totally different matter.


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## andrewf (Mar 1, 2010)

marina628 said:


> 72camaross for $300,000 I will teach you to build a site earning $25,000 a month haha!Payment up front


How about a 49% equity stake?


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## marina628 (Dec 14, 2010)

Thanks for feedback everyone and Brad as for People /Criminals coming to rob me , I am ready for that but won't go into much detail except we use a business address for everything.At Home the only three neighbors we have all have much bigger homes and look like they have more money lol.Of course it helps that we have two Bull Mastiffs which are my babies but they go to the door if they even hear a bug outside against the window ,we live in the country so the bugs are big ! 
My dogs are new addition to the family but they are trained as guard dogs but also for my own safety if i fall etc.They are big babies about 90 pounds each 
and they give kisses for sugar crisps cereal .They go to Doggy Day care when we travel and the lady there said when she walked them they would get between her and a car when one came down the road and stopped til the car passes.


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## marina628 (Dec 14, 2010)

If I had a dollar for every person who asked me to teach them what i do lol.I feel learning the ropes is one thing but you need to have certain abilities and drive that can't be taught .I had a friend who wanted to get into what i do ,i got them a programer and designer to get their site online then they practically wanted me to build the site .I don't have enough hours in the day for my own stuff and I do not do partnerships I like to be the boss and not have to answer to anyone lol


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## Charlie (May 20, 2011)

Congrats marina. That's quite an accomplishment.

My back o' the envelope ballpark tax advice:

You'll either sell the site, or the shares of the company that owns the site.

Since you've owned the site as long as you have, and earned income from it, it seems that taxwise you're looking at a capital gain of some sort.

So your 'worse case' then, is tax on 50% of the gain when it's flowed out to you -- or about $130K. [your absolute worse case, I suppose, would be 46% tax, but given the income and time of ownership, I doubt this would be the case -- your accountant could give you a much better assessment, of course].

All other scenarios are even better: shares qualify for capital gains exemption; company cap gain used to pay your loan out, a cap div out, and income over time; or some other scenario. Here's where your accountant earns her money.

But...sometimes...when contemplating a deal, it's best to know your worse case (say 23% of gross as tax) as you negotiate away. The buyer may not be interested in anything other then a straight domain buy -- or may discount the price too much for other types of deals. 

You obviously know tech and web business better then most of us. Sometimes there's just one buyer out there. And valuations are all over the map. Just pointing out that other factors (especially price!) may offset whatever tax advantage you'd get by muddying the waters too much.


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## 72camaross (Apr 26, 2010)

Marina you are an inspiration! I can learn those languages easily enough but don't use them in my current employment and this has been my job since graduating with a CS degree. My biggest problem is coming up with business ideas and how to go about them. Once in the right direction doing the work is never a problem!

But to get back on the thread topic... I can't help you


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## marina628 (Dec 14, 2010)

No problem 72 , easiest place to start is in a niche you like so you can build some good content then make the revenue from your sales plus your competition buying ad space from you.I have a friend who had acne and bought proactive then blogged about it .They got signed up for that affiliate program and installed Google Adsense on their blog they now are in page one for these keywords and doing very well .I just signed a NDA with potential buyer and sent them some stats and let them know I will need a couple weeks to consider their offer.They offered to fly to Canada for us to meet in person to discuss .I have met them at a trade show in past so know these are legit people .


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## FrugalTrader (Oct 13, 2008)

marina628 said:


> If I had a dollar for every person who asked me to teach them what i do lol.


Marina, maybe that can be your next business venture!


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## marina628 (Dec 14, 2010)

Yes maybe doing a Financial Niche and we can have class here every Monday night and work together lol.Watch for my E-book in this space lol .


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## GameOver (Jun 28, 2011)

Four Pillars said:


> The site earns $300k gross. Given that she spends time on the site and has employees, I think it's safe to say the net is a bit less.
> 
> I don't think their offer is unfair at all.


Yeah I totally agree, gross figures are worthless, it doesn't matter if your business is making 1M a month gross if it isn't making a profit. I'm not saying that you are not but that valuing a business on gross sales is meaningless, until you reveal your net profit discussion of the offer price is worthless.


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## marina628 (Dec 14, 2010)

This website cost less than $1000 a month to run and in June we have $41,000 in revenue so it jumps a bit. I had a phone call with potential buyer and I think we are on same page in terms of what the website is worth and he is considering offering me a % to run the site for them .Will keep you posted in a few days .


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## marina628 (Dec 14, 2010)

This site is one of many websites we have and not a business sale .To give a closer idea on what makes this site attractive it is one of 3 sites that have held first page in google for over 2 years .We actually hold 7 of the top 20 positions for this niche ,the buyer owned the number 1 site and i notice they recently took a big hit in Serps ,probably google got them for their black hat article spinning ways lol.So they need a clean site to work on that is already fairly high ranked.The site is number 8 as of tonight in google ,my other sites hold positions number 2 and number 3 but I will not even consider selling them .I own a number of servers so hosting costs is maybe $10 a month and I pay one guy $480 a week to work on the 3 top sites i mentioned so when i factor all these costs in I am left with an average of $24,000 a month profit.When June numbers are in we are actually looking at over $26,000 average revenue.Anyway thanks everyone once again for the advise , I came to conclusion that I will have to wait until July 5 when my own accountant returns from Vacation to get my answers to my specific questions and for her to explore all my options with me.


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## FrugalTrader (Oct 13, 2008)

Marina, the buyers are also counting the cost to replace "you" in their offer I suspect. So if it costs them $5k per month for someone to run the site after buying, that affects their bottom line.


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## Four Pillars (Apr 5, 2009)

FrugalTrader said:


> Marina, the buyers are also counting the cost to replace "you" in their offer I suspect. So if it costs them $5k per month for someone to run the site after buying, that affects their bottom line.


Ditto - as they say on Dragon's Den "Are you paying yourself"?

Regardless - it sounds like a very profitable site, with or without your time. 

 <-- This is me, green with envy.


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## 72camaross (Apr 26, 2010)

marina628 said:


> No problem 72 , easiest place to start is in a niche you like so you can build some good content then make the revenue from your sales plus your competition buying ad space from you.I have a friend who had acne and bought proactive then blogged about it .They got signed up for that affiliate program and installed Google Adsense on their blog they now are in page one for these keywords and doing very well .I just signed a NDA with potential buyer and sent them some stats and let them know I will need a couple weeks to consider their offer.They offered to fly to Canada for us to meet in person to discuss .I have met them at a trade show in past so know these are legit people .


Thanks for the tips! I'd sign up for that class if I could make it to the webinar! haha its funny you mention your friend because I also just started a new medication that is starting to become popular in Canada for treating people who have what I have...I wonder... 

That's great that you know they are legit people. I'm excited to hear what your accountant says on the 5th. 

I'm also like 4P ->


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## GameOver (Jun 28, 2011)

FrugalTrader said:


> Marina, the buyers are also counting the cost to replace "you" in their offer I suspect. So if it costs them $5k per month for someone to run the site after buying, that affects their bottom line.


Yes don't forget to subtract this from the gross, a common mistake by business owners.


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## marina628 (Dec 14, 2010)

I use this formula payroll /number of sites so if we have 20 sites and spend $20,000 we estimate each site cost is $1000 a month to run.Not actual figures but just easy for the math The site is well aged site with loads of content and affiliate links ,it runs auto pilot but of course to keep search engines happy we usually add one new article a day which cost $6.00 -$15.00 and we do about 50-100 blog posts a day but these are free as it is other members who are posting.We give some amazon cards etc to the members who are helping carry the load .

Marina


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## marina628 (Dec 14, 2010)

Bumping this thread , The company asked that we agree to a priced based on the 'next 3 months revenue ' which would be July , August , and September as they were concerned maybe there could be a drop in the revenue due to so much 'bad news' in this niche.
Currently the net revenue for September is $40255 so we have had about 40% jump in Revenue .Spent about $5000 or so on accountants and lawyers to get sound advise and even had some calls with CRA as well (with names and extensions to back myself up lol)This will be treated as capital gains and split between myself and my husband .The adjusted price we agreed on is $875,000 CAD and I get to keep one account that has about $8000 a month revenue on it.They are relocating one of their account managers to Canada for 4 months so I will have to share all my secrets to them on the website in terms of SEO and how we obtain marketing leads as well .I am currently working with Sedo on selling off a couple smaller sites in same niche ,my goal for myself is to focus on a couple websites and downsize our business next year.


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## kcowan (Jul 1, 2010)

Congratulations and good luck with the brain dump.


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## Four Pillars (Apr 5, 2009)

Congratulations - your website is worth a lot more than mine!


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## sags (May 15, 2010)

Four Pillars said:


> Congratulations - your website is worth a lot more than mine!


Worth a lot more than 99.9% of the websites on the internet.


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## HaroldCrump (Jun 10, 2009)

marina628 said:


> When I have a signed deal and site is Sold I will disclose


Now that all that is done, may we know the URL of this cash printing machine, please?
I am sure everyone here is curious, given the previous responses.


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