Getting Ready For Tax Season

How to Present Your Business When It's Time to Sell

Many baby boomers are planning to retire over the coming years. If they are small business owners, they may be looking to pass their corporation on to a third party as a going concern. If you're in this situation, you may be very attached to your "baby" and want to ensure that the people who take over have the interests of your customers and staff at heart. But you also want to ensure that you get as much money as possible for the transaction and this is where structuring and preparation can make a huge difference. So, what do you need to take into account here?

Stating Your Case

You may know your business in and out and know exactly why it represents a certain value. Yet, you cannot expect a prospective buyer to be a mind reader, and even though they may do a fair amount of their own research before engaging, it's your job to convince them. To do this, you need to gather a great deal of information and present it in a favourable light.

Good Tax Practices

To begin with, ensure that your accounting systems are in good shape and that you adopt best taxation practices at all times. In other words, ensure that you are "squeaky clean" in all your relations with the tax authority and do not try to exploit any loopholes or engage in questionable tactics.

Gathering Records

You will need at least three years of accounting records to include (at the least) profit and loss accounts, balance sheets, asset registers and accounts receivable. If you have any outstanding loans, you may need to take care of these before you can close any deal.

Valuing Your Business

You also need to look at how you earn your money. If you pay yourself a salary, you may be able to deduct that from your profit and loss account before applying a valuation multiple. This insinuates that the incoming owner may not have to incur that particular cost. So, in this case, the business makes more net profit and is, therefore, worth more money.

Getting Professional Help

While you can certainly take all this preparation work on yourself, it's always best to engage the services of an experienced business accountant. They may have already worked on businesses before and can ensure that your accounting records are spotlessly clean. So, get in touch with a good accountant as soon as possible and before you put your plans into motion.

For more information, contact a company such as Harwood Chartered Accountants.