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So, you have a business – and whether you’ve been running it for decades or have only been a business owner for a year or so, you’ve decided that it’s time to sell it and move on. But selling your business is a complicated endeavour, and it involves a lot of thinking and planning. Bear in mind, however, that your profit will greatly depend on the timing, your reasons for selling your business, your business’ strength and success, and your business’ overall structure. So how do you make sure that everything is done right? Here’s your step-by-step guide to selling your business.
Establish your reasons
The first step to selling your business is to establish your reasons for the sale. A prospective buyer will ask this, and you have to be prepared. There are many reasons for a sale, be it retirement, disputes in partnerships, death or illness, the need to rest, the wish to engage in another business, or even just simple boredom. You also have to think about your business’ profitability, the timing, and your readiness to sell, as these will affect the attractiveness of your business to potential buyers.
Determine the value and preparedness of your business
Your business needs to be valued; in other words, you need to determine your business’ worth. An appraiser can help you with this, and so can an experienced broker. Another aspect you have to consider is your preparedness. Ideally, you need about a year to prepare your business, as this will give you time to update and fix your records, structure, and your base of customers. With these improvements, buyers will be more attracted to your business as well.
Choose expert help
If you have time to sell your business on your own, then do it by all means. But most business owners neither have the time nor the skill to advertise their business to potential buyers, so they rely on expert help. A broker can help market your business and find good prospects, and they are experienced in all aspects of selling a business. They can sell a business much faster and with a higher price as well since this is how they earn a better commission.
Prepare the relevant paperwork
In the process of selling your business, you should also prepare the relevant paperwork. Draw up your financial records as well as tax returns for the last 3 years and assess them with your accountant. List down equipment that will come with the sale, and list down assets which aren’t part of the sale (such as vehicles, real estate, etc.). Create a document which details your business operations or update your business manual, so you can present it to qualified buyers.
Finalising the sale
The process of selling your business will take time, so be patient. But once you have a serious buyer, it’s time to finalise the sale – make sure the buyer is financially qualified and be ready to negotiate if necessary. All agreements should be in writing, and make sure to confirm important documents such as the bill of sale, a security agreement, and the like. Luckily, a good broker can take care of these aspects, and all you have to do is check everything twice and confirm the final sale once everything is correctly laid out.