In this week’s blog we cover the key details that surround selling your business.
People go into business for many different reasons. For some, their business is their pride and joy, a lifelong dream, and a lifetime’s work. For others, however, it’s all about making money – building the business up and then selling it for the highest price possible.
Some people start off with their dream business and then get made an offer that they just can’t refuse. Whatever the case may be, there are many cases where people sell their businesses, and there are some important factors involved in the process to ensure that it’s a successful and effective sale for all parties.
Like most things in life, the key to the smooth running of a sale is preparation. It means that the process can go through quicker, as information should be at hand, and there will be no nasty surprises which could lead to delay- or even buyers dropping out.
You should think about the price of your business – how are you going to price it? What can you do to add value to it? What about staff? You should also think about other important aspects such as:
- Potential legal issues
- Outstanding tax issues
- Other financial queries
- Ongoing environmental issues
Think about what you would (or wouldn’t) want to see in a new business and use this as a basis to the state that you should have your business in. It is advised that these are all resolved before selling.
Expect a potential buyer to investigate the due diligence of your company, so you should carry out your own internal due diligence to check that everything is in order – and anything that you do find, get it resolved.
One area where a lot of people get tripped up is in business ownership. There are a number of rules that often catch people out. For example, a lot of people believe that they will only have to pay a capital gains tax of 10% because of the entrepreneur’s tax relief. However, you should remember that shares in trading companies can be affected by substantial non-trading activities, like activity management of surplus cash, or the ownership of investment properties.
You should also be aware of non-trading activities which should be taken out before marketing. For example, a husband or wife who is a shareholder but doesn’t work in the business would NOT be entitled to entrepreneur’s tax relief.
Down to the last day
It is important to remember to keep on running the business right down to the last day. Only when the deal has actually gone though, can you stop, stand back and enjoy your hard work. Keep pushing right through to the end to ensure that the sale goes through as you intended and you don’t end up losing out at the last minute.
In the selling of any business, there are a number of potential, unexpected hurdles and the best way to be prepared for them is by having an accountant help you through. For more information about selling a business and other accounting issues, get in touch today.