Selling a limited company is not always an easy decision. If you have spent years building something to be proud of letting go is frequently a bittersweet experience. Sometimes it makes more sense to sell a business even when the heart yearns to keep it.
After making the decision to sell there is a clearly defined but often complicated path to follow and responsibilities which must be met.
Consider the following carefully because it dictates the route to the eventual sale: is the entire or only part of the enterprise for sale?
Working on the premise that the whole limited company is being sold these responsibilities are essential to focus on:
Appointing new company directors
These people or person should be installed prior to the resignation of the current director or directors and the sales process completion. A limited company must have at least one director to trade legally so this needs to be a coordinated effort. To ignore this is to invite legal complications and surely no one would wish to do that?
Remember that Companies House must be informed about changes but this takes just a few minutes and can be carried out online.
Any charges against the company which fall in to the category of the business owner’s personal assets are to be handled effectively.
For example, if the business owner took out a second mortgage to fund his or her business the sale must be made clear to the lender within 21 days of the transaction taking place.
Capital Gains Tax
When selling, the business owner is asked to factor in the capital gains which will be released by the sale. This relates to cash and material items that they are keeping after the transaction. Taking expert advice is of paramount importance.
A VAT registration number is issued to a company when it becomes eligible for VAT payments to be made. The registration number must be transferred from the vendor to the purchaser. This isn’t just for administrative purposes, if at a later stage the new owner fails to pay VAT, the legalities fall to the previous owner who is still in possession of the registration number as far as the authorities are aware. As a vendor, please don’t leave yourself at risk of such eventualities.
Changes to records can be managed online so it is quick and convenient to meet this responsibility in a timely manner.
If the notion of selling, the responsibilities, processes and liabilities is daunting, please remember that expert assistance is available and delivers peace of mind to everyone involved.
With over thirty years of accrued knowledge, Tim Luscombe works with Thames Valley Business Advisors to help SME’s and small business brokers to sell or purchase a company, plus he is a prominent M&A consultant, business owner and qualified accountant. His extensive career has lead him to work in the oil industry, engineering, manufacture, post-acquisition integration and inquisitive IT sectors.
It’s a wise decision to work with him and obtain the optimum transaction experience.