Understanding How Goodwill is Taxed for Business Owners - Final Ascent M&A Advisors

Goodwill is the intangible value that a business possesses due to its reputation, customer base, branding, and other factors. In this guide, we will explore the different types of goodwill, how goodwill is taxed for business owners, and what you need to know as a business owner.What is Goodwill?Goodwill is an intangible asset that represents the residual value of a business’s reputation, customer base, and established relationships with suppliers and employees. It can be categorized as either purchased or self-created goodwill.Goodwill is like a bank account where businesses can deposit trust, credibility, and reputation. It’s a valuable asset that can help a company maintain a competitive edge.Types of GoodwillHow goodwill is taxed for business owners depends on the type of goodwill. Here are the two main types:Purchased GoodwillThis type of goodwill arises when a business is acquired for a price that exceeds the fair market value of its net identifiable assets.Self-Created GoodwillTh...