Selling your business can be a stressful and emotional decision, but there is help available along the way. Here’s what you need to know.
Making the decision to sell your business
There are several things to factor in when you are thinking about selling your business. It’s no easy task, but knowing approximately how much you want to sell it for is important. If you are selling due to financial issues, you may want to seek advice which could put your business back on track to succeed. Bottom line, make sure selling is the right choice for you.
Consider using a business advisor when selling
The process of selling a business can be very time consuming and complicated, so to help you through the process, consider hiring a business advisor or other credible professionals who specialise in this field. They can make the process less stressful by helping you understand the legal and government requirements for selling a business. Contact our friendly staff at QLD Accounting Group if you need assistance.
Working out the value of a business
Working out your business’ value is important as it can help you decide how much you want to sell it for. There are a number of common methods used for working out the value of a business. These methods may include projecting future profits, assessing the value of assets and figuring out how much the goodwill you have established over the years is worth. It’s important to note that there isn’t one set method and a combination of methods is allowed to be used to figure out the desired sale value. You may also be required to negotiate the valuation method with the prospective buyer or financier.
Finding a buyer interested in your business
To find a suitable buyer for your business you may want to consider contacting real estate agents or business brokers, advertise online, in newspapers and other publications. You may also want to notify your employees or customers that you are considering selling as long as you’re confident it won’t negatively affect your business. The way you advertise depends on your industry, contacts and business type. It’s all important to find out if your state or territory requires you to give specific information to potential buyers.
Negotiating the sale of a business
When you’re negotiating a sale, make sure that the business information you have given is completely accurate. If you say something or provide information that is later proved to be untrue, it could be labelled as misleading or even deceptive behaviour. To reach a deal, you will need to agree on the sale price, deposit amount, settlement period, arrangement for current staff and figure out if handover training is required. Reaching a compromise on some details may lead to the best possible outcome.
Preparing the contract
For the most part, an intermediary will draw up the sale contract (except in NSW where it is done by a solicitor). Many small business owners will ask their solicitor to review a contract and the same move will usually be done by the buyer’s lawyer as well. A solicitor will make sure the contract doesn’t have any false statements and it covers every aspect of the proposed sale.
Communicating with employees
When an owner sells a business, the employees usually either get transferred with the business to the new owner or they are told that their services will no longer be required. In either situation, the transfer of the business ends an employee’s position with you, so as their former employer, you will need to give them proper notice of ending employment or payment in lieu of notice. It’s important for outgoing owners to communicate with current employees and let them know what their employment status will be once the new owner takes over the business.
Understanding legal matters and tax implications
It’s really important to consider insurance requirements for the business as a way to be covered in case any legal claims are made after you sell the business. You should also find out if GST and the Capital Gains Tax applies to the sale. If you registered your business for GST, you may have to include GST in the price of your individual business assets or repay GST credits. Also, Capital Gain Tax concessions may be available if you’re selling a small business. It’s important to know that if you can’t pay your taxes on time, you may be eligible to do it under an ATO payment plan.
Transferring the business to a new owner
When the business is sold, you will need to transfer leases, licenses as well as permits to the new owner. It’s important to know that you’re still responsible for any lease agreements and obligations for the business until they are transferred and leases can often come with varying conditions when it comes to transferring of ownership. Also keep in mind, the transferring of licenses can sometimes take up to 12 months to complete depending on the circumstance. If you’re selling and won’t be a part of it any longer, you may need to cancel your ABN and notify the ATO of this change. You may also have to cancel tax registrations such as GST and lodge any final tax returns. You will have to pay any final bills and transfer web registrations and any business, customer and employee records to the new owner.
Assistance available following sale of business
Selling a business can be a stressful and emotional time for everyone involved. You’ve most likely put in loads of time, money and energy into the business. So it’s important to know that no matter your situation following the sale, there is financial and employment advice available through many government services.
If you are considering selling your business, our friendly, professional team will help you obtain a maximum return for you. Contact us for a free, no-obligation consultation today.