Legal Comment from Mark Illidge of Hinterland Lawyers

March 2008

Taxation Considerations

The first step in the sale of your business should be to meet with your accountant to discuss the tax implications from the sale. Consideration will need to be given to whether there is a sale of shares (if the business is owned by a company) or a sale of assets. If it is a sale of shares you should check on the ownership of the shares and the whereabouts of the share certificates. If it is a sale of assets, you will need advice as to whether the assets are sold at the written-down value or some other value. You should also check whether the assets are leased or encumbered. If they are leased you will need to make arrangements to pay out the lease agreement or assign it to the buyer. If the assets are encumbered, you will need to arrange a release/discharge with your lender. GST will also need to be considered, however, generally, the sale of a business will be exempt from GST.

Due Diligence

A prudent buyer will insist on conducting a due diligence on your business. Accordingly, it is advisable for you to conduct your own due diligence to ensure things are in order. Consideration needs to be given to the following:

• Intellectual Property - Business names and trademark registration should be up-to-date;
• Leases - Are the rent and outgoings paid up-to-date? How long remains on the term of the lease?;
• Employees - Ensure records are up-to-date and consider superannuation and holiday and long service entitlements;
• Local Council - Are there any zoning issues or outstanding notices from the Local Council?

Confidentiality Agreement

Prospective buyers should be required to sign a Confidentiality Agreement prior to being provided with any information about your business.

To find out more about the authors you can read About Us

For more information or to make an appointment please Contact Us