Don’t close before you sell – Selling your business GST free
In this article, I go through the considerations for closing your business and whether you should sell it.
Firstly – it isn’t failure to decide your business isn’t helping you meet your goals and joining someone elses (whether as a employee or as a merger).
Should I keep my business running?
Just as you wouldn’t resign from a job before accepting a new one, you should keep your business running as you go to sell it.
The reason for this is that it will be more valuable and also that you may be able to sell the business GST free as a Ongoing Concern (more on this later).
Should I sell my business?
Short answer is YES – you should try.
There are some cases that it doesn’t make sense to sell your business. But generally, even if you don’t have many clients, you have a customer database that could want to buy the services of your business again, and someone else would find that valuable.
I won’t sell it for much – what is the point?
I agree that your business might not be worth much to an existing purchaser. However, it can provide some money that can be used in a special way. It could be a gift to your family in thank you for supporting you through this business journey.
Should I communicate with a broker?
If you are planning to get $1,000 for your business – the broker won’t want you as a customer. (It is not worth a business brokers time).
However, they may appreciate the contact as they may be able to offer it to their business buyers.
When you are selling a house nobody is buying, you wish that someone would just make an offer.
When you are in business – you just wish that someone about to close down their business would give you the opportunity to buy customers at a reasonable rate.
To sell your business GST free
You need to provide everything that is needed to run the business.
The ATO provide the summary of this in this link
The ATO go into a lot more detail in this link in GST Ruling 2002/5
But a lot of it is logical.
I.e. If you are a Doctor, you can’t give the purchaser your personal licence. The ATO know that the business asset (like the premises) may be held in a different entity to the one that runs the business.
Selling a business has a lot more to it – does the payment include an earnout arrangement? Is the sale eligible for the small business CGT concessions?
Even if your upfront amount isn’t much – you could earn a reasonable amount of money if you agree to a con