Selling your Business? Ready, Set....Sell
So you have decided to sell your business and are starting to take the first steps to get everything prepared.
But before you hit the “go “ button, there are several items that should be reviewed so you know where you stand before the business is put up for sale. These include-
Tax implications- The proceeds from a business sale could be subject to a number of different taxes on exit. It is important that you share your plans for sale with your accountant and seek advise as to what taxes you may need to pay.
One tax that sellers and buyers won’t need to worry about if they are selling an existing business is GST. Currently businesses attract no GST if they are sold as a going concern.
However other taxes including Capital gains tax could apply depending on your circumstances so find out where you stand before you exit.
Staff Leave and Entitlements- The standard conditions of sale state that on settlement a seller needs to allow 70% of all employee’s accrued sick leave and annual leave. Employees with over 5 years of service will also have any provisions for long service leave transferred to the incoming buyer.
This can be a big bill that some seller don’t expect. There have been some sales that I have been involved in where this comes in in excess of $100,000 which ultimately comes off the sale price to cover all the entitlements that the staff have built up.
Asset Payouts- Most businesses have some assets on lease. Most commonly this might include motor vehicles, phone systems or photocopiers.
Any assets that are leased by the business need to be paid out by the seller so the buyer takes over with no encumbrances over the assets.
The exception to his rule is if an asset is Hired a buyer can chose to continue a hire “ a forklift is an asset that many businesses might choose to hire instead of buy or finance.
By looking into these items before you put the business on the market, you will save yourself any costly surprises once you find a buyer for your business.