July 29, 2014

Selling A Business

Saying Goodbye

Barbara Miracle | 4/1/2005
Just as running a successful business takes a well thought out plan, so does shutting down a business. "You don't just put a sign out in front of the business saying, 'For Sale,' " says Steve Komondorea, chairman of the Florida Business Brokers Association and owner of RealAmerica Realty in Cape Coral. Here are some tips:

Consider your options.

If you love your business but are feeling the stress of working 24/7, decide whether a vacation or additional manpower will put you back on track or if getting out is really the right move.

Plan.

Contact a business broker or begin your own networking at least six months before you want to move on.

Consider income tax consequences.

Equipment and inventory are "tangible" and will be taxed as ordinary income, says Howard Lucas, a CPA and partner with Goldstein Schechter Price Lucas Horwitz & Co. in Coral Gables. Intangible assets such as customer lists, a valuable brand and a lease in a good shopping center will be taxed at the much lower capital gains rate.

Look at your personal tax consequences.

Think about your long-term personal financial planning. There are a number of trusts that will help you save on taxes.

Be realistic.

Look at whether your industry is growing or shrinking long term. The local hardware store is probably less valuable than it was 15 years ago now that Home Depot and Lowe's are just around the corner.

CLOSING THE DEAL
Once you have found a buyer, there are a series of steps typically involved in making the sale. Here are the details from CCH Tax and Accounting, a publisher of business, legal and tax information and software:

The letter of intent. The buyer outlines the terms and price informally agreed to in a written, non-binding letter and promises confidentiality.

Due diligence. Buyer and seller have a limited time in which to investigate each other thoroughly.

Purchase agreement. Lawyers hash out details of the purchase agreement.

Closing the deal. Both sides sign the contracts that transfer ownership, promissory notes, security interests, etc., as well as any documents required by third-party lenders. The seller gets the down payment. The buyer gets possession of the business.

Tags: Florida Small Business, North Central, Business Services, Entrepreneur

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