[Question] Selling a business

[AmithS]

What is the best way to sell a business in terms of VAT & Tax.

Sell the cc, keep the cc, transfer the VAT registration?

Regards,

[Dave A]

What is the best way to sell a business in terms of VAT & Tax.

Maybe you better expand a bit on what is on your mind with that angle.

Normally the issue is disposing of liabilities (such as sureties) along with the sale - in which case current wisdom suggests you sell the business out of the cc. However, your post suggests you have other concerns.

[AmithS]

i was thinking of 2 things,

1. the tax liability and VAT that i might have to pay
2. the surteys, how do i get rid of those by selling the business out of the cc

Not sure if this is any clearer at all

[BusFact]

Based on the above, I would suggest you buy the "business" from the old cc and put it into your new cc.

By this I mean that you buy the customer list, the staff contracts, the stock, the equipment and anything else you need to run the business. You do not buy the old cc reg 01/12345/08 for example.

This means that all the liabilities (debts) of the old cc stay with it and its members. They must sort out any tax problems and any sureties are for that old cc and not your cc.

This leave you in a position where you know exactly what you have bought with no surprise debts suddenly being brought to your attention a few months after the pirchase.

There is some admin involved. You will need to register your own new cc to buy the company with, you will need to register for income tax and get your own vat number. You will have to negotiate terms with suppliers and do your best to avoid personal sureties.

Extra work perhaps, but definitely safer.

[Martinco]

and get your own vat number.

This seems to be the problem lately..............SARS seems very reluctant to issue new numbers.

[Dave A]

SARS may seem "reluctant", but ultimately they don't have a choice if you qualify.

SARS's concern is fraud, thus the extra measures to verify the bona fides of new VAT registration applications.

[BusFact]

This seems to be the problem lately..............SARS seems very reluctant to issue new numbers.

More a case of demanding more paper work and giving you extra hoops to jump through.

Its still doable, just a pain. It also only has to be done once.

The alternative is suddenly getting a notice from SARS that your newly bought company under declared VAT 5 years ago in August and you're now liable for interest, penalties and arrears. It may be a small chance, but I'd prefer to start with a clean sheet and do everything by the book from the start.

[placido]

a problem need to be solved!

[flaker]

Buyer's needs

am sure JWalker was seeking advice as SELLER. i think it would be buyer's prerogative to purchase in the manner desired and as pointed out by BusFact buyer may correctly buy out of the cc to avoid any problems rearing their ugly heads in the future (tax liability etc). it would be a condition of the sale that the new purchaser provide any sureties that may replace those that were supplied by seller enabling holder of sellers sureties to have same cancelled.
seller & buyer will, one would imagine, seek appropriate tax accountant's advice as to wording of agreement in respect of assets & goodwill to minimise CGT for seller & allow probable future depreciation write off of "purchased" assets for buyer.A lot of homework for both parties

[BusFact]

am sure JWalker was seeking advice as SELLER.

Crikey, you're right. I must learn to read the post properly before rambling on. Sorry JWalker.

However, that said, I feel its even more important for the seller to sell the business instead of the company, mainly because of long forgotten about sureties for suppliers.

All you need is for the buyer to fail in the business and then you'll have suppliers knocking at your door - a bit rough if years have passed. A good broker would probably tie up SARS commitments (such as providing a new company secretary), but I still think its safer to make a clean cut.

It all very well having an agreement whereby the buyer says he'll take over sureties, but its whether the supplier will accept this that is ultimately important.

[Dave A]

am sure JWalker was seeking advice as SELLER.

Crikey, you're right. I must learn to read the post properly before rambling on. Sorry JWalker.

I think your post 4 covered the ground anyway

[wynn]

Mark Corke has been blogging for a while about how to prepare your business for sale perhaps you should subscribe to his free site

http://www.prepareyourbusinessforsale.co.za/

disclaimer; I recieve no kickback for reccomending this site!