Winding up and selling a business is not an easy task no matter the reason. You will have to face multiple issues when selling. During the process, you will have to come across records dating, tax issues, and your employees.
Your records should be in good shape when you are selling a business. This is because your buyer‘s accountants and lawyers will check everything to make:
- Right decision based on the right facts
- They’ll also evaluate and modify the terms of sale
They will check your profit and sales statements, tax returns, and details of leases and loans. So this is a list of things you need to consider before selling a business.
If you have just stopped trading as a self-employed, you need to tell HMRC about it. You still have to complete your self-assessment tax return for the current tax year. For example, if you have stopped your self-employment on 15 May 2020, you will have to submit the tax return for the tax year 2020-21.
Capital Gains Tax
CGT is paid on the selling of the assets in profit. For example, if you are selling business equipment, goodwill or any building and making a profit out of it then you will have to pay CGT on it.
There are reliefs available, notably Entrepreneurs’ Relief which will reduce or postpone your CGT.
Offsetting costs against your tax bill
There may be some offsetting costs included while selling a business. Some costs may include:
- Cost of administration, postage, and telephone charges
- Fee payments of your accountants and lawyers
- You can offset these allowable expenses against your tax bill
You can also offset your losses against your tax bill. If you are self-employed and posted a loss then you can offset these losses for the previous three years.
Class 2 National Insurance contributions
You have to tell HMRC before closing your business. This will affect your class 2 National Insurance as well. Telling doesn’t mean that you have to drop by their office. Just giving them a call on the helpline will do.
Selling a limited company
If you are selling your limited company then you also have to inform Companies House in advance. If you are selling then it means that the company’s director or secretary is changing.
You can go to WebFiling which is a good and reliable way to file companies’ information online. You can save money on your annual return. This Companies House platform is free of charge for you to use.
Inform Companies House
WebFiling is a safe and reliable way for you to file company information online. As well as saving money on your annual return, WebFiling allows you to file most company information free of charge.
You cannot just wrap everything and leave. You have to inform your employees and it is legally bounded under business transfer legislation.