Selling a business can feel like a daunting task, but it doesn’t have to be. Whether you’re ready to retire, pursue a new venture, or simply cash in on your hard work, knowing how to sell a business is essential for a smooth transition.
In this guide, we’ll break down the steps you need to take, from preparing your business for sale to finding the right buyer. With the right approach, you can ensure that you get the best value for your hard-earned investment while making the process as easy as possible.
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.
Business Records
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 the 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.
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Notify HMRC
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 stopped your self-employment on 15 May 2024, you will have to submit the tax return for the tax year 2024-25.
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.
Other Responsibilities
You cannot just wrap everything up and leave. You have to inform your employees and it is legally bounded under business transfer legislation.
Are you looking for professional tech-savvy tax advisors and accountants in the UK to guide you? Contact us now!
Quick Sum Up
In conclusion, knowing how to sell a business can pave the way for a successful transition and a brighter financial future. It’s important to prepare thoroughly, from valuing your business accurately to marketing it effectively and negotiating the best deal.
Don’t hesitate to seek help from professionals who can guide you through the complexities of the selling process. With the right approach, selling your business can be a rewarding experience, allowing you to move on to your next venture with confidence and capital in hand.
Disclaimer: All the information provided in this article on How to Sell a Business and Close down? including all the texts and graphics, is general in nature. It does not intend to disregard any of the professional advice.
