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Selling Up and Moving On; Preparation Tips for Making Your Business Sale a Success

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Selling Up and Moving On; Preparation Tips for Making Your Business Sale a Success

By Caron_Beesley, Contributor
Published: March 23, 2010

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Whether

you've reached the end of the road as a business owner and are looking to move

on, or have reached the point where you can 'cash-out' and reap significant

rewards from a business sale, the process of selling a business can be almost

as tricky to navigate as starting your dream business was in the first place.

In

addition to knowing when to sell, there are many decisions to be made and

obligations to be met - from structuring your sale, to finding a buyer,

managing regulatory ties and commitments, inventorying assets, transferring

ownership, and so on.

Below

are some tips and resources to help you understand some of the key aspects of

getting your business ready for sale.

Preparing for a Business Sale - Make

Sure your Business is in Good Shape

Market

factors play a huge role in the process of selling a business and much like

selling a home, getting your business ready for sale requires planning and

preparation. Just as you might keep your home freshly painted and your lawn

neatly trimmed in the run up to a sale, you will also want to make your

business looks equally attractive to a potential buyer.

Remember

the old adage 'what you put in is what you get out'.

Even

in a down economy, keeping your business in ship shape condition with sustained

sales and marketing efforts can help you position it for a quick and strong

sale when things start to pick up.

The

dichotomy is that when things do start to pick up, many entrepreneurs are

hesitant to back away from their business as they enjoy a boom time, the

consequence being that they often reject potential buyers, only to regret their

decision when their business takes a downward turn.

In

this 'Planning your Exit'

guide the Small

Business Administration (SBA) offers small

business owners tips and advice to maximize the value of their business while

developing a 'getting out' plan. It also includes a checklist of items

(including obligations to your employees, partners, property managers, and so

on) that should be considered as early in the process as possible.

Before the For Sale Sign Goes Up - Understand your Tax

Situation

Aside

from market conditions and the health of your business, another area to

consider before selling up is the tax ramifications of doing so.

As

sure as eggs are eggs, the IRS will take a large share of the money you receive

from a business sale. A CPA or tax expert can help you understand what to

expect in this regard but, as a rule, the structure of your business will

influence this number. For example most corporations, LLCs, partnerships, and

sole proprietors are asset sales - and the IRS typically treats each of these

assets separately for determining gain or loss.

Read

more at IRS.gov Sale of a Business Guide. You can also learn more about how your chosen

business structure affects your tax obligations from Business.gov here.

Setting a Realistic Asking Price for

Your Business

This

might be the first aspect of a potential business sale that keeps your mind

occupied, but deciding upon a realistic asking price requires research, market

insight, and oftentimes expert intervention. Trying to determine the worth of

your business is not easy and, while sale prices typically depend on profit

values, it is often best left to the experts to determine a fair market price.

An appraiser or a business broker can help. The latter can even help guide you

through a confidential sale and screen prospective buyers.

The

SBA offers a variety of guides to help you make sure the price is right, help

you find a buyer, help get seller financing, and much more. Read them here.

Understand how to Close Your Business

Legally - State and Local Regulatory Obligations

In

addition to taking care of your federal tax commitments (refer to this Closing a Business Checklist from the IRS) you will also need to check off several

state and local government regulatory requirements associated with selling a

business. These include but are not limited to:

  • Releasing fictitious

    'doing business as'

    names

  • Filing forms with

    your state for the dissolution or cancellation of a partnership, LLC, or

    corporation

  • The cancellation of

    any permits or licenses you hold with your county or state

  • Processing your

    final employee tax forms such as payroll taxes, withholding reports, etc.

  • Notifying your

    local Commissioner of Revenue about your changed business status

Read

*'What Steps Must I Follow to Close My Business

Legally?' (*www.legalmatch.com) to learn about the five steps you need to take to

legally close your business and check your individual state requirements here.

Get Help from these Resources

Every

business is different so it's best to get independent advice about the

particulars that apply to your business sale. The government offers many free

in-person resources across the country who can help with all stages of running,

and selling, a small business. These include SCORE, your local SBA office, Small Business

Development Centers

and more. Business.gov lists all the available free and confidential local

small business assistance resources here.

* Note: Directs reader to a non-government Web site.

About the Author:

Caron Beesley

Contributor

Caron Beesley is a small business owner, a writer, and marketing communications consultant. Caron works with the SBA.gov team to promote essential government resources that help entrepreneurs and small business owners start-up, grow and succeed. Follow Caron on Twitter: @caronbeesley

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