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Selling a business can be, and often is, complex venture that involves several considerations. One of the key aspects is establishing a valuation for your business which can require that you enlist the help of an accountant.
Getting the right valuation for your business is a complex task. This often involves the use of a accountant, thankfully MJ Kane have several accountants qualified in business valuations who will be more than happy to help you with this.
We can value your business in multiple ways. It is key to select the correct valuation method in order to ensure you get the correct value for your business and don’t undervalue. Some of the methods our accountants use to value a business are:
It’s important to go beyond the numbers however. Our accountants will analysis your businesses growth potential and brand strength as well as the above calculation method, in order to achieve an accurate valuation.
There are annual and lifetime allowances you will need to take note of as this will directly impact your appetite to sell a business and buy a business in the future. Selling a business tax comprises Capital Gains Tax (CGT), Business Asset Disposal Relief (BADR) and possibly Corporation Tax.
Capital Gains Tax is the tax applied on the profits made from selling your business, not the total amount received from the sale. For example, if you sell your business for £100,000, whereas you acquired it for £10,000, the total gain will be £90,000. Therefore, Capital Gains Tax will apply to the £90,000 gain.
The annual exemption for Capital Gains Tax for the tax year is £12,300 (see our capital gains service page for more details on this). Gains made under the tax-free allowance will not be subject to Capital Gains Tax.
When selling your business, you may qualify for tax relief through Business Asset Disposal Relief. This is a reduced rate of Capital Gains Tax at 10%. You will only be able to claim this relief for gains up to £1 million throughout your lifetime. Gains above this amount are subject to standard CGT rates.