Successfully selling a business requires you, as a business owner, taking a more serious approach. Before you start the marketing process, you need to prepare and arrange everything in sequence. You must start preparation by ensuring that your financial records, books, and documents are arranged. You must then consult a
and conduct business evaluations.
When preparing for business sales, the owner also needs to prioritize their post-sales financial future, to avoid expensive mistakes and get the best results. Talking with your tax accountant can help you understand personal circumstances and companies that can affect you, as owners, from sales. Your tax advisor can also help you understand your choice in terms of sales structure and its impact can have the owner’s personal tax status.
What are some tax factors to consider when selling or closing your business?
If you plan to close or sell your business, there are several opportunities for you to make money at a lower tax rate. This places your sales income under income tax instead of a professional income tax return services. However, there are several other things that recommend our tax advisers:
Another way to save taxes when you close your company is to maintain the benefits of your company and open it so that the gathering benefits can be charged to make money with a level of freedom of 10%, not income tax.
To apply this procedure, you cannot engage in the same business within two years after completion. If so, then tax profits will be cancelled because of various laws on avoidance (‘phoenixing’) imposed by the government. This law was introduced in 2016, preventing shareholders from directly get tax benefits through the method.
Because of the laws introduced in 2016, you may have a higher tax rate when you sell your business. One way to reduce this is to sell your company’s assets and keep the payment you receive from the company. This gives you the option to enjoy your retirement savings when your income is expected to fall under a lower tax belt. However, it is possible that the government can take additional steps to prevent this.
Related: Capital strengthening tax is a tax imposed on the benefits you make when you sell a property that increases in value. Learn more about CGT in our guide.
Another way to reduce your tax, when you sell your company, is a long-term plan. One way to do this is to use taxes and payments to pay for termination of employment. This law has been updated recently, in 2018 for taxes and in 2020 for this, so it is impossible for them to face changes soon. Updated tax and free lease payments allow up to £ 30,000.
Your business value is determined by the decisions and actions you take in its development. Watch this video to learn more.