Exiting your business can be a ‘taxing’ issue

Whenever I’m approached by a business owner wishing to exit their company, they all want the same thing – to achieve the most financially advantageous exit.

With tax having such a huge impact on the sale of a business, it is, first of all, important that the business owner understands the tax implications of selling their company and how much money they can expect to lose out to the taxman.

Obviously the aim is to minimise this amount, whilst maximising the amount that goes to the business owner – the one who has actually earned this money! Whilst remaining on the right side of the law, of course.

If you are planning to sell your company, you could be liable to pay capital gains tax on the profit that you make from the sale of your business; the rate that you are subject to will depend on how long you have owned the business for.

Currently, capital gains tax allowance stands at £10,100 for 2009-10, so any profit under this threshold is yours to keep. Anything above this threshold is liable for the taxman to take his share.

If your company is classed as a business asset (the operations of your particular company will determine this) then you could also be able to claim business asset taper relief – which will reduce your capital gains tax bill by anything up to 75%.

If, like 40% of all other entrepreneurs, you invest this profit in another enterprise and become a ‘serial entrepreneur’ you can avoid your capital gains tax bill entirely. The only downside to this is, the profit still isn’t yours to spend – it’s now tied up in another business just as it was in your original company.

It’s often a wise idea to employ the services of a tax advisor and business exit specialist to help you determine the most tax-efficient, economically advantageous option available to you in your particular situation. The cost of paying for such advice and guidance is almost always far-outweighed by the gains made from implementing whatever strategy they advise.

Take Mr Smith, from a successful manufacturing firm. He released the value in his business by selling the company to his three sons. During this process, his tax advisor and business exit specialist helped him to decide on the best people to sell the business to, structure and organise the firm ready for its takeover, arrange the valuation of the business, and undertake the entire sales process – ensuring all legal requirements were met.

Without this professional assistance, Mr Smith is certain that he would not have experienced such a favourable outcome when exiting his company.

Mr Smith was yet another of our many satisfied clients.

So if you’re planning on parting with your company anytime soon, give us a call on 01709 810081 to enable us to help you through the entire process and maximise the value of your business.

How to exit your business successfully with a carefully constructed business exit strategy

One of the things I find is that business owners and investors often turn a blind eye to business exit strategy planning, opting instead to focus on the short-term and the issues that need dealing with immediately.

They often complain about not having the time, or the patience, to sit down and develop a carefully thought-out business development and exit strategy.

This is one of the worst mistakes an entrepreneur or investor can make.

Let me ask a question. Why did you invest in, or establish, your business?

Was it to make the company money? Was it to deliver superior customer satisfaction in your industry? Was it to deliver great quality products and/or services?

No.

You set your business up, or invested in a business, because you wanted to build your own personal wealth. In the vast majority of cases, this is the underlying reason for people investing in, or starting, a business.

So why do so many business owners and investors neglect the one thing that can help to maximise their own personal wealth, a solid exit strategy?

Our company, Exit and Succession Facilitation Limited (EASF) specialise in helping business owners and investors think about their business from an objective, rational perspective, allowing them to plan in advance when and how they expect to part with their business for maximum financial advantage.

We do so by using our unique, massively effective Entrepreneur Cultivator© system.

This system takes an objective look at where your business currently stands in the market and what your personal goals and passions are, it then moves on to develop a strategy for success – addressing dangers with contingency planning, building an extensive, productive ‘to-do’ list to ensure you are constantly working towards objectives, reviewing all cost and revenue issues, and eventually planning a successful, lucrative exit from your company.

Over the years we have used the Entrepreneur Cultivator© system to help business owners and investors across the country to get the most from their companies and maximise their personal financial returns upon implementation of their exit strategies.

Led by two highly-experienced consultants, Bob Brown (me) and Brian Viner, EASF (based in Rotherham, near Sheffield) is the first port of call for many business owners and investors across the UK who are looking to plan an exit from their company or companies.

As an introductory offer to help you realise the value of careful business development and exit strategy planning, we are now offering a 1-hour FREE consultancy session with me, Bob Brown.

I guarantee to reveal at least one idea that will save or make your company more money during this session.

What have you got to lose?

Get in touch with me to arrange your FREE 1-hour consultation on 07976 667226 or send me an email at bb@easf.co.uk.

Will the economy recover? Of course it will. And when it does, you could be in a position to take advantage of it

I’m often asked ‘when is the best time to exit a business’?

The truth is . . . it depends.

It depends on your particular personal goals, the nature of your company, the industry in which it operates, and a number of other dynamics.

But what I do tell them is: Don’t leave it too late to plan!

People all-too-often leave it too late to build a successful exit strategy. Or at least one that totally maximises their potential return from their business.

See, an exit strategy should be built well in advance of the point that you feel you need to leave your business, largely because, if you don’t have a carefully constructed exit strategy, you probably won’t ever get to a point where you can part with your business for maximum return.

You need your exit strategy to guide you, clearly, towards a particular point where you can make a calculated exit from your company.

Planning an exit strategy in advance will also allow you to maintain objectivity and a clear mind, whereas planning it at a later stage will undoubtedly be rushed and may potentially involve clouded judgement.

Planning your exit strategy in advance gives you a clear vantage point for the future.

And right now, the future can only get better for business and the economy.

That means many business owners will be looking to exit their companies within the next few years when things pick back up to the extent that they think they can earn a tidy personal sum for floating, selling, franchising, or implementing succession on their business.

But those who fail to plan their exit strategies in advance will experience a significantly less rewarding outcome than those that plan carefully, far in advance.

In fact, the statistics are rather worrying.

A study underwritten by MassMutual found that 67% of men and women investors/business owners had no plan of exit in writing. That’s over two thirds of the entire population of business owners and investors.

These people will be getting significantly less value from their business when they come to the point of exit, than the other 33% of business owners and investors.

Don’t follow the majority.

Our company, Exit and Succession Facilitation Limited (EASF) specialise in helping owners and investors of small- to medium-sized businesses exit their companies successfully and rewardingly.

We can not only help you to discover when you should exit your business, we will also help you to plan how you are going to part with your business. Different options suit different businesses, so it is important that every alternative is considered and explored before arriving at a final business exit strategy.

Over the past three years, we have helped many business owners to carefully plan their exit routes from their respective companies, allowing them to maximise their personal gains and be rewarded for their many years of hard work developing their businesses.

Get in touch with me, Bob Brown, at EASF today on 01709 810081 to maximise the value from your business. Don’t leave it too late!