You’re ready to sell your business and move on to something new. All that you need to do is find a willing buyer, and you’re good to go. Right? Not so fast!
Selling a business isn’t as easy as selling a coffee table online. While money will change hands and you’ll eventually hand it over to someone else, the process to get there isn’t as simple as it seems. As a very experienced business broker, it’s evident there are many legal, tax and financial obligations you’ll need to consider before you take the plunge. Skipping these could result in a failed sale – or worse, significant penalties that will change your life forever. Here are two of the most commonly overlooked elements of selling a business that many people forget about.
1. What Happens to My Employees?
Did you assume that when you’re selling your business that the new owner will keep things precisely as they are – including keeping your current staff on board? You should know that it might not work out this way. If your employees are transferred as part of your business, you’ll need to finalise all their records and any obligations the employer will have for them going forward. At this point, you’ll need to pay out any outstanding wages and accrued leave. If your employees leave, you may need to pay out an employment termination payment and deal with tax issues relating to fringe benefits, pay as you go and superannuation.
2. What Happens to Insurance Obligations?
Selling your business means that it in effect ceases to operate – even if the new owner will be undertaking the same work for the same clients. Should any customer come back with complaints about work you had previously done, the new owner of the business won’t be responsible – but you still will, even if you aren’t working in the same field or working at all. For this reason, it’s recommended that you factor in the cost of run-off cover insurance that will commence when your business is sold and continue for a set amount of years afterwards. This will protect you against claims made after you’ve sold your business, so you don’t have to worry about unexpected costs bogging you down in the future.
These are just two of the many elements you need to consider when selling your business. Contact us today if you’re thinking of selling your business, or if you simply need some advice on the right steps to take to sell your business in the future.