[Revealed] 9 Steps to Selling Your Business in Australia

[Revealed] 9 Steps to Selling Your Business in Australia
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About 99.8% of the companies in Australia are small and mid-sized enterprises. It requires much work, struggles, and sacrifices to get a small business functioning, and selling it is a complex process, both logistically and emotionally.  There are a variety of aspects to take into consideration to make the best deal. If you’re ready to market and sell your business, consider following the steps mentioned below.

Step 1: Assess Selling Reasons 

Making unwise choices when selling a business could result in future regrets. Consider the reasons to sell your business and analyze if it’s the right choice. For this, seek advice from experts, family members, and friends to ensure that you’ve made the right choice. If you’re selling because of financial constraints, consider exhausting all your present options first before committing to a sale.

Step 2: Hire Professionals

If you’re convinced that you have to sell your business, consider employing trustworthy and certified business brokers, accountants, and trademark lawyers to ensure the selling process doesn’t attract legal or operational hiccups. 

Step 3: Decide Elements of Sale

Create a list of the things to be included in the sale. It can ease the valuation process for your company. The elements that you can add or eliminate from a sale include:

  • Assets of the business
  • Name of registered business 
  • Intellectual-property
  • Businesses own properties

Step 4: Assess Your Business

Business valuations are used to find the value of your stake in a company. Valuation helps buyers and sellers determine the amount they’re willing to pay or get. Standard methods of business valuation include:

  • Market analysis: It involves comparing your company and businesses that were recently sold. It also provides insight into the potential market value.
  • Net worth calculation: This consists in finding the difference between the business assets and liabilities. Assets include tangible and intangible business components.
  • Return of investment (ROI): Use the business’s latest net profits to determine its value.

Step 5: Find Buyers 

There are numerous ways to find buyers when you are selling your business. The method you choose should be based on your business nature and the industry. 

Here is how you can attract buyers:

  • Using business broker
  • Using online listing sites
  • Leveraging local listings and networks
  • Selling to a partner or employee
  • Using digital and traditional media

Step 6: Negotiate the Sale

After finding buyers, it’s time to start negotiating the terms. As many business selling processes are complex, consider taking help from advisors. 

Your accountants can look over the financials and tax implications of the sale. Your lawyer will go through the deal terms and ensure it is as per your interest. 

A sale negotiation usually focuses on:

  • The sale price
  • The deposit amount
  • Settlement period
  • Handover training
  • Existing staff arrangements

Step 7: Preparation of Contract 

When making a sales contract, it should conform with your state or territory requirements. Ask a lawyer to ensure that your contract covers all sale aspects and contains no errors. 

The sale contract may include:

  • Transfer relevant assets (property, equipment fittings, stock, rights to use brand names, etc.)
  • All relevant liabilities (business premises lease and creditors)
  • Employee transfer and their entitlements
  • Unforeseeable circumstances clause, e.g., if the buyer withdraws their interest before a sale concludes.

Business sales are subject to Capital Gains Tax (CGT) and Goods & Services Tax (GST). Check for CGT concessions for your small business. If it is registered for GST, you need to include it in the asset prices. Additionally, evaluate the tax commitments you need to pay from your business’ sales and pay them accordingly.

Step 9: Business Transfer to New Owner

After selling the business, transfer it to the new owner. It involves:

  • Transfer of leases, permits, and licenses.
  • Finalising instalment notices, text returns, and activity statements
  • ABN cancellation.
  • Business name transfer or cancellation.

How Do I Value My Business for Sale in Australia?

Assume you sought a minimum ROI of 50% on the sale of your firm. If your company’s net profit for the previous year was $100,000, you may calculate the minimal selling price.

What Are the 7 Ways to Sell?

Prospecting, preparation, approach, presentation, resolving objections, closure, and follow-up are the seven common processes in the selling process. The first three parts of the selling process entail researching prospects’ goals and needs, with your presentation coming in the middle.

Do You Pay Tax on the Sale of a Business in Australia?

Selling your firm, regardless of its structure, is considered to be selling an asset. This means you made a capital gain on the transaction and must pay capital gains tax.

Key Takeaway 

Being an entrepreneur, selling a business is a complicated process. If you’ve decided to sell your business, you must adhere to the steps mentioned above and hire professionals to facilitate a seamless sales process. 

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