If you are reading this, there is a good chance that you have one foot in the retirement door. You may be wondering what to do with your business when it's time to retire. There are many options available for someone who wants to retire their business. However, each scenario comes with important considerations.
Let's delve into the most popular options available when retiring your business.
One option is to sell your business. This can be a great way to get some money out of your business. It could be especially appealing if you don't want to continue running it after retirement. When selling your business it is so important to get advice from a qualified accountant. There are many tax implications to consider and these can have a significant impact on the amount of money you receive from the sale.
If you sell your business for more than it's worth on your tax return, you will have to pay capital gains taxes on the difference. This can be a significant amount of money and is something to keep in mind when setting a sale price.
Another thing to consider is that the proceeds from the sale of a business may be subject to self-employment taxes. However, your accountant will be able to advise on your liabilities for this and provide advice on any relevant tax reliefs.
Another option is to pass your business on to your children or another family member. This can be a great way to ensure that the business continues in the family. It may even mean you still have some input into the business. This may seem like the most simple option but there are a few things to keep in mind.
One thing to note is that family members are not automatically entitled to own the business just because they are related to you. They will need to be approved as shareholders by the company's board. There may also be other restrictions depending on the type of company you have.
If you own a VAT registered you must be aware of the "transfer of a going concern" rules. This is in place to ensure that the correct amount of VAT, when chargeable, is properly accounted for and paid. This can be difficult to navigate so professional assistance is highly recommended.
Another thing to consider is the business value. A family member may be willing to purchase the business at a lower price than what it's worth on the open market. If this is the case, you will need to make sure that you are comfortable with this. Ensure that you receive appropriate consideration for your years of hard work.
Another option is to continue in some capacity after retirement. This could mean continuing to run the business but with a reduced workload or simply being available as a consultant. This can be a great way to maintain some ties to the business you've spent so many years building. It can also give you some extra income in retirement.
A more common solution when you retire is a trade sale. A trade sale means that another business buys your assets and continues operating them under their own name. If this is your preferred arrangement it is a very good idea to employ a professional advisor. They will work with you to market your company and make sure all of the legalities are adhered to. Keep in mind that you will have to disclose all of your liabilities to the buyer to close the sale if you go down this route.
No matter what you decide to do, it's important to consult with an accountant. They can help you navigate the tax implications of your decision. If you want to weigh up your options your accountant can help you decide which route is best for you. This ensures that you take all necessary steps to make sure the process is as stress-free and profitable for you as possible.