Selling a business is usually prompted by a number of factors and usually falls into three broad categories – market conditions, financial pressures and life changes. However, sometimes you have no choice but to fold your business. Whatever, the reasons it can be a difficult process but whatever the reasons there are a number of things to consider.
The first thing to do is to get all your tax and official records up to date – the main reason for this is so that your buyers solicitors can carry out due diligence checks. This is so that they can make an informed decision and change any terms of the sale if necessary. They will want to see among other things see profit-and-loss statements, tax returns, any relevant leases and details of any outstanding loans, with repayment schedules.
You will also need to inform your customers and suppliers so that they can raise any outstanding payments, credits and liabilities and you can account for any outstanding payments, credits and liabilities when you finalise your accounts and tax affairs.
You also need to inform HM Revenues & Customs (HMRC) and if you are selling a registered company or a limited liability partnership (LLP) you will also have to let Companies House know. This means that you can then fulfil your legal requirements as well as pay any owed VAT, National Insurance or Tax.
You also have a legal responsibility to inform and consult your employees under the business transfer legislation.
It is also worth considering all your options so instead of looking for a buyer on the open market, you could look into a management buy-out, where the managers, or even the staff, own the company. You could also consider passing the business on to a family member.
It is a good idea to seek advice on your legal requirements and of course speak to your business insurance provider to find out what cover you will need during the process for example you may need “run off” professional indemnity insurance after you have sold your business to cover against any future claims that may arise.