Selling your business could be a tough decision. You might have spent a lot of time and effort building it. There are various reasons why you could be selling it. You could be moving to something bigger and better, you could be in dire need of money, or you want to enter a different industry. There are more reasons too. Just like when you sell a house, you want that house to bring a high price. That’s why you make it look good by having it renovated. Selling a business also works the same way, but you’d have to do much more planning than selling a house. You can prepare a good business value; as a result, you’d get the best sale price. Most people prefer hiring a professional accounting firm that can help with the finances. There are various things you should consider when selling the business. This article will talk about the different aspects you have to keep in mind when selling your business. Let’s find out what those are!
Business Assets and Shares
You’d have to decide whether you will sell the asset of your business which is also called Asset sales, and what about selling the company’s shares which are called a share sale. Both of these have their advantages.
Asset Sales
You can sell both tangible and intangible assets in an asset sale. Land, equipment, and inventory would come under the category of tangible assets. Intangible assets are not physical in nature, like the business’s goodwill, list of the customers, patents, copyrights, and trademarks. If you do not have your company incorporated, then you’d be left with the option of asset sale only as you won’t have the share certificates. One of the pros of the tax is that you can negotiate the price paid for each asset, resulting in you receiving the best tax benefit.
Share Sales
When your business is incorporated, you are eligible to sell the shares as well. If the share is acquired, it will result in all business assets, including the name and transfer to the buyer. In a business, when there are assets, there comes a liability as well. The buyer would be in a bit of difficulty with any unexpected costs, for instance, the back taxes that need to be paid. The best advantage of a share sale is that you wouldn’t need to pay any tax on a share sale. Secondly, you are eligible for a lifetime exemption of $750,000 on capital gains when you are a Canadian Resident.
Increasing your business value
Whether you want to sell your business right now or not, few things would help you get your business in the best shape to get the maximum value whenever you go to sell your business.1-Seek outside help: Contact a professional person who has been dealing with business sales for some time so that he can provide you with the best exit strategy.2-Look for Efficiencies: Imagine yourself going to buy a business. Would you buy the one an inefficient business? No. That’s why you need to make sure that your business has good operational efficiency.3-Continue to invest: Once you have decided to sell your business, it doesn’t mean that you will stop investing in it. The potential buyer will look at how you are running the business and how much you have invested in it recently.
Conclusion
Now you must be familiar with what you need to do when selling your business. As described above, there are two things you can do. Either sell the assets or the shares of the company. There are many advantages if you get your business incorporated. For instance, when your business is not incorporated, you can not use the option of a share sale, so that’s why it is always a good option to get your company incorporated, and for that, you’d have to prepare and file for the corporate tax. You have to be patient when you are selling the business, and if you are in a hurry, you may not get the offer you were expecting.