Sales of Business Faqs

Do I have to sell my business name?

 
It is not compulsory to sell a business name with a business. In the majority of cases the business name is sold with the business. In many businesses a large part of the value of the business is in the name and the amount you receive for the business may therefore be reduced if you wish to keep the business name.
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I own the building from which my business is run. Can I keep it if I sell the business?

 
It may be possible to keep the building and grant a lease of it to the new business. The new business may not be interested in buying the building as this would involve a large capital outlay. The idea of leasing the building from you might therefore be very attractive to the buyer of the business. This would also have the benefit to you of providing an income over a period of years and reducing a capital receipt and the potential tax liability on that capital receipt.
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Who will have the benefit of the debts owed to the business when it is sold?

 
The contract for the sale of the business will make provision as to whether you or the buyer will collect any debts owing to the business at the time the business is sold. It is more common for the buyer to have the benefit of any moneys owing to the business and that benefit will be reflected in the price paid for the business; the sums would have to be defined. Often, if the business is not a limited company, the seller will be entitled to money owed.
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I would like to retain some interest in the business when it is sold. Can I?

 
This will depend upon the buyer of the business. The buyer may wish to have complete control of the business so that he can do with it what he wishes. If the buyer is happy for you to retain an interest in the business then this would be possible in one of a number of ways eg. if you are the sole owner of the business by becoming a partner of the buyer or a consultant to the buyer. If the business comprises a limited company, you could retain some shares in the company and those shares may or may not have voting rights which would enable you to have a say in its running
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My business has a liquor licence. Will I have to transfer it?

 
More than likely, yes. A liquor licence comes with some responsibility and potential liability. You would therefore wish to transfer the licence to the buyer. It is also very unlikely that the buyer would want you to retain the licence and thereby some control over the business.
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Will I have to sell the business equipment with the business?

 
It would probably be in your own interest to sell the equipment with the business as it may be of very little use to you once the business has been sold. The buyer will probably want the equipment so that he can continue the business with the minimum of the disruption which would be caused if he had to replace all equipment at the outset. You can only sell what you actually own i.e. not assets subject to lease or hire purchase.
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I have been told I will not be able to run another business if I sell my current business. Is this correct?

 
Probably. The buyer of the business will want to ensure that you do not set up in competition with him and take the customers away from the business which you have sold and have received money for. With the odd exception, a restriction will be imposed upon you against running or being involved in a similar business to that sold for a period of up to two years within a specified radius of the business premises.
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Will I have to assist the buyer of the business once I have sold it to him?

 
There will be no obligation on you to assist the buyer of the business, unless such obligation has been put in the sale agreement. However, it is common, particularly in small businesses, for the seller to assist the buyer in making introductions to customers and suppliers so as to provide a smooth handover of the business.
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I have people working for me. Can I protect them?

 
You can make provision in the agreement for the sale of the business for the buyer to take on the existing staff of the business. If the buyer takes on the staff, he will have to do so upon the same terms and conditions of employment as exist at the time of the sale of the business

Do I have to pay any tax when I sell the business?

 
If you have made a profit when the business is sold, there may be a liability to Capital Gains Tax. The amount of tax payable will depend upon a number of factors, eg. how long you have owned the business, your age and whether you intend to invest the proceeds of sale of the business in another business.
 
 
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