What You Need to Know Before Selling Your Business
Posted by Ocean Wealth
There’s any number of reasons that can lead you to sell your business. It can be as cut and dried as retirement or something more complicated such as a serious health concern. The decision can even come out of nowhere with a sudden change of heart about the line of work you’re in. But it’s what happens once that decision is made that becomes especially critical.
Depending on the size and scale of your business, selling it can be quite a process. There are many financial and legal steps to be taken before you get to a finalized sale. As a business owner, you may already have a vision for what you want that process to look like. It’s up to your financial advisors, accountants, and lawyers to work with you in order to make that vision a reality.
With that in mind, there are still some things you need to know before jumping into a sale. We’re here to help simplify the process, so you’re ready to take action once the next step in your professional life gets underway.
Life throws so many curveballs at us on a daily basis that nothing is ever fully certain. And that includes business. Because of that, as a business owner, you should always plan for uncertainty and understand that your business may change hands at some point in time.
Even if you’re not planning to sell your business right now, plan ahead. Putting a succession plan in place will allow you to transfer the ownership of your business to someone else. This plan should also identify important information for the new owners, such as training and day-to-day responsibilities.
Another important thing to consider is an estate plan. Should you unexpectedly pass away, you may leave your family to deal with the muddy details of your business. You should also keep in mind that estate planning for business owners can include more complicated tax issues and complex investment structures.
Manage Your Taxes
Taxes are one of the most important things to consider when selling your business. It’s easy to get lost in a “who’s going to pay what” situation without having a clear outline in the final sale.
Along with the purchaser of your business, you’re able to jointly elect no GST / HST payable on the sale. You can do this if you’re selling a business that you established or carried on, or if the purchaser acquires ownership, possession, or use of at least 90% of the property. In this case, it has to be reasonably regarded as necessary for the purchaser to be capable of carrying on the business as a business.
Another tax-related piece of information to keep in mind is whether the business you’re selling has a registered business number (BN). This number identifies your business to federal, provincial, and municipal governments. If you have one, contact a tax services office as you may have to cancel your BN as a result of the sale.
Getting to the point of actually finalizing your sale can be a lengthy process. For a quick and smooth sale, you should have a group of advisors who can help. As we mentioned earlier, a combination of financial advisors, accountants, and lawyers are always good to have on hand.
Sealing the Deal
This group of advisors can also help you find the right buyer for your company. Their connections within the business community will make it easier to find someone who’s aligned with your vision for the company’s future.
With the help of your advisors, you should create a clear sale agreement that outlines everything you want in the deal. There may even be specifics such as your desire to stay with the company as a board member or consultant. All that must be put into the sale agreement ahead of time so that there’s no ambiguity later on.
Our trusted team of experienced advisors can help you work out the financial details of selling your business with care and confidence. Contact us today!