There is one person who has almost as big an interest in the sale of your business as you do – and that is the Tax Man.
The decision to sell all or part of your business, and head towards retirement (or other business challenges), is not an easy one. This is due to a number of considerations, not the least, the emotional aspect of letting go of what you have worked so hard to create.
After you have worked through the emotional issues, the decision to sell, or to keep battling on for a few more years, often comes down to the cold hard reality of money – how much will I be left with to “live on” or “play with” after the dust has settled.
Unfortunately, the “market value” of your business (i.e. what someone will pay for it), is in most cases not a very accurate indication of how much cash you will be left with. This is because the price paid by the buyer represents the “gross” inflow, out of which you will need to meet a number of liabilities.
The extent of liabilities you will be responsible for will to some extent depend on the deal that you are able to strike with the buyer. However, the biggest impact on your final cash balance is likely to be tax.
The extent of tax payable on the sale of your business will depend on a number of factors. These factors include:
- The structure through which you carry on your business;
- Whether the buyer is willing to buy your business vehicle or the underlying business assets (i.e. a “share sale” or “asset sale”);
- The price you originally paid to acquire the business (or the assets making up the business);
- The extent of “revenue” and “capital” assets in your business (i.e. stock and equipment v. goodwill and property);
- Your ability to access any general CGT concessions;
- Your ability to access the CGT small business concessions;
- Your ability to qualify for any concessional termination or redundancy payments payments; and
- Your ability to utilise superannuation planning strategies.
We are able to assist you (working with your accountant) in quantifying the likely Tax-Impact™ arising from the sale of your business. This includes both the initial Tax-Impact when the business is first sold, as well as the overall final Tax-Impact when the proceeds from sale are finally distributed to you and your business structure has been wound-up. Put simple we can help you work out how much cash-in-hand you will be left with.
We are also able to assist you:
- Structure your business and investments to give you the best shot at minimising the Tax-Impact on an eventual sale of your business; and
- Prepare in advance for the sale or succession of your business – so that you are in control of the process, and the final “take-home” cash outcome.