How to Sell My Shares and What to Expect After

Selling shares is a common financial activity that involves several important considerations and procedural steps. Understanding these aspects helps ensure a smooth transaction and proper financial management. This process requires attention to detail, from identifying where your shares are located to comprehending the financial and tax implications that follow a sale.

Preparing to Sell Your Shares

Before initiating a share sale, identify precisely how your shares are held. Shares are commonly held in a brokerage account, electronically recorded in “street name” by your broker. Alternatively, shares might be held through Direct Stock Purchase Plans (DSPPs) or Dividend Reinvestment Plans (DRIPs), registered directly on the company’s books and managed by a transfer agent. Physical stock certificates are another method, where you safeguard the paper document. The method of holding your shares dictates whether you sell through your broker or a transfer agent.

Gathering necessary information is a preliminary step. You will need account numbers, login credentials, or shareholder identification numbers. A crucial piece of information is the “cost basis” of your shares, which refers to the original price paid for the investment, including any commissions or fees. Understanding your cost basis is important because it directly impacts the calculation of capital gains or losses when you sell, affecting your tax liability. Accurate record-keeping of your cost basis can prevent incorrect tax calculations.

Shares can be categorized as common or preferred. Common shares represent ownership and voting rights, while preferred shares offer fixed dividend payments and have priority claims on assets during liquidation. Complex share types like Restricted Stock Units (RSUs) or Employee Stock Option Plans (ESOPs) generally convert into common shares once vested or exercised, simplifying the selling process.

Executing the Sale

Once preparatory steps are complete, the share sale involves placing an order. For shares held in a brokerage account, the most common method is online through your broker’s platform. This involves logging into your account, navigating to the “sell” option, selecting the stock and number of shares, and choosing an order type.

Selling shares can also be done via phone by contacting your broker or the company’s transfer agent. When calling, have your account details, shareholder identification, and the specific shares you wish to sell readily available. The representative will guide you through confirming your identity and transaction specifics.

Selling physical stock certificates requires a distinct process, often involving mail. You will need to endorse the back of the physical certificate or complete a separate stock power form. A “Medallion Signature Guarantee” is frequently required for physical certificates to prevent fraud. This is a special stamp from a financial institution that verifies your signature and confirms your legal capacity to transfer the shares. The completed and guaranteed documents, along with the physical certificates, are then mailed to the transfer agent for processing.

When placing a sell order, understanding common order types is important. A “market order” instructs your broker to sell your shares immediately at the best available current market price. While it ensures prompt execution, the exact price received might fluctuate slightly. In contrast, a “limit order” allows you to specify a minimum price at which you are willing to sell your shares. This provides more price control, as the order will only execute if the market price reaches your specified limit or better, though it does not guarantee execution. Confirm all details before finalizing any order to avoid errors.

After the Sale: Settlement and Beyond

After a share sale is executed, the transaction enters a “settlement” period. For most stock transactions in the United States, the standard settlement period is “T+1,” meaning the trade officially completes one business day after the transaction date. This period allows for the exchange of securities and funds between accounts.

Upon settlement, the sale proceeds are deposited into a linked bank account. For shares held through a brokerage, the funds appear in your brokerage cash account and can then be transferred to your bank electronically. If you sold physical certificates through a transfer agent, the proceeds might be mailed to you as a check, or you may have the option for direct deposit if you provided banking information.

Transaction costs are associated with selling shares. These can include brokerage commissions, which are fees charged by your broker for facilitating the sale. Regulatory fees, such as those imposed by the Securities and Exchange Commission (SEC) or FINRA, may also apply. If dealing with a transfer agent, specific transfer agent fees might also be incurred.

The sale of shares carries important tax implications, primarily concerning capital gains and capital losses. A capital gain occurs when you sell shares for more than their cost basis, while a capital loss results from selling them for less. The cost basis is essential for accurately calculating these gains or losses for tax reporting purposes. These gains or losses must be reported on your annual tax return. Brokers and transfer agents provide Form 1099-B, “Proceeds From Broker and Barter Exchange Transactions,” which details the sale proceeds and often includes cost basis information, assisting you in preparing your tax filings.