What does selling a business entail?
Are you looking to sell a business in the UK? There are a number of things you will need to consider as well as obligations you will need to meet when it comes to selling, with these requirements changing depending on whether you are a self-employed sole trader, business partnership or a limited company. Guarantor Loan Comparison talks you through everything you need to know step-by-step in this guide.
Are you a self -employed sole trader?
As stated on the GOV.UK, you have certain legal responsibilities that you must abide by when it comes to selling your business. This pertains not only to make sure that you have finalised your business’s tax affairs but also regarding any staff that you employ.
Here is your checklist when it comes to selling your business:
- When it comes to people working for you, you will need to let them know why you have decided to sell the company, as well as when this will be happening. You will also need to inform them about redundancy packages, and if related to your company relocation packages that are included.
- If changing ownership, ensure that you are not in breach of employee’s rights. This refers to the rights employees have under the Transfer of Undertakings (Protection of Employment) regulations (TUPE), and is applicable to staff of businesses that are based in the UK. To make sure that you are following the guidelines and to avoid a potential lawsuit, you can check here for more detail about what the TUPE regulations relate to.
- You will also need to call HMRC in order to cancel your Class 2 National Insurance contributions by contacting them via the National Insurance Helpline
- You will also need to let HMRC know that you have sold the business. This can be done by completing an online form which also covers you for Self Assessment. You need to make sure you have stated the exact day the company stopped trading
- You may also need to transfer the VAT registration number to the new business owner
- It may also be the case that you need to pay Capital Gains Tax (e.g. if you receive any assets from the company that you then keep), however, you may be able to get tax relief through the form of Entrepreneurs’ Relief, which is available in the UK.
The responsibilities that you have when selling a partnership will be dependent on whether or not you are selling your share or the entirety of the partnership.
- If you have employee’s they will need to be informed as to why and when you are selling the partnership, they will also need to be informed about any redundancy packages provided
- You will need to contact HMRC to cancel your Class 2 National Insurance contributions if selling the partnership means that you will no longer be self-employed
- You may also need to transfer the VAT registration number to a new owner
- If you are selling the entire partnership, you will need to send your own personal Self Assessment tax return, as well as make sure the nominated partner also sends their partnership tax return
- You may also be liable to pay Capital Gains Tax, but may also be able to claim Entrepreneurs’ Relief as well as potentially other tax reliefs that are available in the UK
Again, the exact responsibilities you have will be dependent on whether or not the company is selling a part of it, or if you are selling the entire shareholding. If selling part of it, you will:
- Need to inform employees affected by the sale, when it will be sold as well as redundancy terms. This includes informing those who are involved in any aspect of the business (for example perhaps you have a production line, and therefore this means you will need to contact factory staff to let them know about the sale of the business).
If you are selling the entire shareholding you will need to:
- Inform Companies House about who the new directors will be, these should be appointed before you resign
- If you have made ‘capital gains’ you will also need to pay Capital Gains Tax. Once more, you may also be able to claim certain tax reliefs against this, one of these ways may be through Entrepreneur’s Relief.
- If you finance secured against personal property for the business, you must let the providers know within 3 weeks of the sale is made
- The transferral of VAT registration may also be needed to be carried out