To-do list if selling your business

If you are selling your business, there are some important actions you must take in order to properly finalise your affairs. We have summarised below some of the main steps you need to take if closing your business. Please note that this is not an exhaustive list and it is important to check what else may be required.

Self-employed sole trader

  • Notify any staff about when and why you are selling your business.
  • Keep staff informed about redundancy terms or relocation packages and be mindful not to breach your employees’ rights.
  • Notify HMRC. There is an online form that can be completed to tell HMRC you are closing your business. The form covers both Self-Assessment and National Insurance.
  • Cancel your VAT registration or possibly transfer to new business owner.
  • Consider your liability to Capital Gains Tax and whether you can benefit from reliefs including Entrepreneurs’ Relief.

Business partnership

  • Your responsibilities when selling a partnership will depend on whether you’re selling your share of the partnership or the entire partnership.
  • Keep staff informed about redundancy terms or relocation packages and be mindful not to breach your employees’ rights.
  • If you will cease being self-employed, cancel your Class 2 National Insurance contributions.
  • Cancel your VAT registration or possibly transfer to new business owner.
  • Consider your liability to Capital Gains Tax and whether you can benefit from reliefs including Entrepreneurs’ Relief.

Limited company

  • Your responsibilities when selling a limited company will depend on whether you’re selling your entire shareholding, or the company is selling part of its' business. 
  • Keep staff informed about redundancy terms or relocation packages and be mindful not to breach your employees’ rights.
  • If you are selling your entire shareholding you should appoint new directors before you resign as a director yourself.
  • Consider your liability to Capital Gains Tax and whether you can benefit from reliefs including Entrepreneurs’ Relief.
  • If there are charges against your company, for example a mortgage on your house to secure a business loan, you must let the provider know within 21 days of the sale.
  • You may want to transfer your VAT registration to the new owner.

Source: HM Revenue & Customs | 25-09-2019

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