When it comes to selling or purchasing a business, there are crucial and less apparent issues you might not remember.
Here are our top 3 hidden matters to consider when buying or selling a business:
Debtors and creditors: In an asset sale, the parties must agree on who takes on the debtors and the creditors at the settlement date. Commonly, all assets and liabilities pre-settlement remain with the vendor, and post-settlement is the purchaser’s responsibility. There are various options when tackling debtors and creditors, and finding the best outcome to suit your business is paramount!
Employees: Purchasers ordinarily need to advise the vendor of the employees they wish to retain and those they do not want to transfer. For those not transferring, it is the responsibility of the vendor to terminate or make redundant by their notice period. The purchaser must then offer the transferring employees an offer of employment that is the same or better conditions than their existing arrangements.
GST: GST is usually payable on the sale of goods or services. However, the sale of businesses in operation and profit-making are exempt from GST and are called a “going concern.” This should be specified in the contract between the parties and, to ensure that GST is not payable under the contract, there shouldn’t be any interruption to trading of the business.
If you require assistance with business asset sales, contact Rankin Business Lawyers for practical, on-point commercial legal guidance.