7 legal tips before selling your business.
[dropcap]W[/dropcap]hen selling a business, your primary concern might be that you get enough money from the sale – and that a buyer is found quickly enough to suit your needs. However, by rushing the process or just looking for a big payout, you might miss out on some opportunities or even make a legal faux pas. Here are seven tips to keep in mind from a legal standpoint.
7 Legal Tips Before Selling Your Business.
Who owns what?
The first thing you need to do is to figure out what you actually own. You might think that you have certain rights that you are not actually authorized to sell. This might particularly apply if you’re selling a franchise, or if you create any kind of content for your clients. You need to know what you have legal ownership over, as you might not really own the content, the name of the business, or even the right to sell it on.
Separate the business.
Next up, you need to break the business down into separate parts and realize what you actually have to sell. In most cases, as a business owner, you will own several things: a brand name; a website; premises; stock; the ability to trade under the brand name in this particular sector; customer data; and so on. Ensure that your legal ownership of each of these things is packaged in a way that you want it. For example, you could register the ownership of the brand name to yourself personally, and continue to profit on the name later.
Know your name.
If your business is named after yourself, then you might have a hard time deciding what to do about the brand name. You could sell the company, the premises, the stock, the customer database, and so on, but insist on keeping the name. In other cases, you might have to sell the name because it is the appeal of that name that the new buyer wants. Fashion designers often run into this problem, for example.
Get a contract drawn up.
You need to ensure that the contract of sale lists everything that the buyer is buying, in detail. You may also want to add legal provisions about the things that they aren’t buying, for example, if you’re keeping hold of the brand name trademark. Be sure to go over this with help from a lawyer to ensure that all clauses are legally binding.
Know the process.
Selling a business isn’t as simple as handing over the keys to your premises in exchange for a cheque. You have to actually go through a full legal process, which follows many different stages. It’s advisable to read up on this process before you even start to think about selling, so you can be sure to follow it properly and avoid legal backlash.
Declare your taxes.
Be aware that the amount you sell your business for probably won’t be the amount you are allowed to keep. You have to pay taxes on this sale, as it will be considered as income for you personally. This is important when working out what price to set for the business.
Get everything in order.
You should also get all of your documentation and records in order. It’s likely that the buyer will want to see this information before they agree to a sale – and it’s important to have it up to date anyway.
There are lots to think about, but good legal advice can make it easier for you to handle. Don’t miss out on potential profit, or make a big legal mistake, by ignoring these tips.
7 Legal Tips Before Selling Your Business
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