Deciding to sell your business is a massive decision to make and one that should not be made lightly. It requires plenty of planning and thinking about why you want to sell your business? How selling your business will impact your life? And what things do you need to do to ensure that whoever takes over your business is able to succeed when you are gone?
Here is a list of things to consider before you sell your business.
You Need To Make Sure That You Are Making The Right Decision
You must ask yourself what is the real reason behind your decision to want to sell your business. This is an important thing to ask yourself because the majority of people who are interested in buying your business will probably ask you why have you decided to sell your business.
If the reason you want to sell your business is somehow related to any financial problems, you’re experiencing you need to consider getting professional advice from a business adviser who can guide you and help you understand the pros and cons of selling your business. A trusted business advisor will help you decide whether you should or shouldn’t sell. This is important to take into consideration because selling your business might lead to you having to pay additional obligations such as; tax amounts from asset sales or employee entitlements.
Decide What Assets Associated with Your Business Are Going to Be Sold
You need to make a decision on what assets are going to be included with the sale of your business. By outlining what exactly is going to be sold you will make it easier to value your business.
You need to ask yourself some questions such as; do you want to sell the business outright and include all of the assets in your sale?
If you don’t want to include everything in the sale you need to ask yourself what assets do you not want to sell?
Ask yourself do you want to sell your registered business name? Ask yourself if you are planning to sell the intellectual property (IP) associated with your business?
You also need to ask whether or not you want to include any property that the business might own in your sale?
Vale Your Business
To make sure that you value your business properly you will need to have access to a large range of information. This information includes; your financial statements from the past five years. This includes; cashflow statements, annual turner over, debts and profit and loss statements.
You can also analyse the market by comparing your business to similar businesses that have recently been sold.
When valuing your business, you will also need to provide details of your physical assets such as; buildings and machinery and stock.
You will need to provide legal information such as; legal documents such as; leases and your insurance policies.
You will need to provide registration papers such as; Australian Business Number (ABN), your business name certificates, licenses, permits and any other documents that indicate that you are complying with any government related requirements.
You will also need to include your business profile, procedures and plans. This includes; market conditions such as the details of your competitors and how your business compares to these competitors.
Find A Buyer For Your Business
There are a number of different methods that can be used to advertise the sale of your business.
This can include; digital and social media or traditional media, business brokers or real estate agents, your friends and family and employees, word of mouths and also via current and former customers of your business.
Arrange A Meeting with Potential Buyers to Discuss the Sale of Your Business
What you are trying to sell your business to potential buyers, you need to make sure that the information you provide them with is true and accurate. This is because if you say anything that is untrue this could be considered as deceptive or misleading behaviour.
You need to agree with the buy on a number of things such as; sale price, settlement period, deposit amount (generally 10 percent of the sale price), handover training if there is any required and arrangements for current staff members.
Prepare The Contract
You need to find out if the state or territory you live in has any special requirements associated with preparing your contract.
You can also arrange for a solicitor to check to read over your contract. A solicitor can confirm that for you that there are no false statements in your contract and they will also make sure that your contract covers every element associated with the sale of your business.
This includes; every asset that is being sold such as; property, equipment, stock and so on.
It will include all relevant liabilities. This will include; creditors and people who the business owes money to and the lease of the business’s physical premises.
The contact will also include responsibility for employees and employee entitlements. It will also outline if employees are included with the sale of the business.
It will also include statements outline what will happen if any problems arise such as; if the buyer decides to not go ahead with the sale of the business or if a mistake is discovered in the contract.
Take Care of Your Employees
Before you sell your business, you need to let your employees know if they will be transferred across to the new owner or if their employment will end as a result of the sale of the business.
You must give your employees notice about the end of their employment with you and give them a payment in lieu of notice.
You need to give all relevant employee information to the new owner when the employee is transferred with the business.
Finalise Your Tax And Any Legal Issues Your Business Has
You need to find out if Capital Gains Tax (CGT) and Goods & Services Tx (GST) are included in the sale of your business.
If your business is registered for GST, you will most likely need to include the GST in the price of each individual business asset that is being sold.
You need to figure out all of the tax obligations that will occur as a result of selling your business so that way you are prepared and avoid finding yourself in debt.
If you’re unable to pay all your taxes on top you might be able to gain assistance from the Australian Tax Office (ATO) who will offer you a payment plan.
Transfer Your Business to The New Owner
After your business is sold, you will need to make sure that your business is transferred to the new owner.
To make this possible you will need to transfer leases, permits and licenses.
You will need to complete any tax returns, activity statements and any instalment notices.
You will also need to cancel your ABN and also either transfer or cancel your business name.
The Team at Vault is here to help, offering a full range of financial products to assist you with your financial objectives. Contact the Team at (07) 3012 6724, email us at email@example.com or use the chatbot below to schedule a meeting.