# How do you sell a business

## How do I figure out how much to sell my business for?

Determining Your Business’s Market Value Tally the value of assets. Add up the value of everything the business owns, including all equipment and inventory. Base it on revenue. How much does the business generate in annual sales? Use earnings multiples. Do a discounted cash-flow analysis. Go beyond financial formulas.

## Do I pay tax on selling my business?

Capital Gains Tax (CGT) is the tax payable on the sale of capital assets. Capital assets include businesses that are a going concern as well as capital assets that have been part of a business . A capital gain arises when the sale price exceeds the cost base of the asset in question.

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## What is the rule of thumb for valuing a business?

The most commonly used rule of thumb is simply a percentage of the annual sales, or better yet, the last 12 months of sales/revenues. Another rule of thumb used in the Guide is a multiple of earnings. In small businesses , the multiple is used against what is termed Seller’s Discretionary Earnings (SDE).

## How much should I sell my small business for?

Value (selling price) = (net annual profit/ROI) x 100 If your business’ net profit for the past year was \$100,000, you could work out the minimum selling price you should set. In this case, to achieve a ROI of at least 50%, you’ll need to sell your business for at least \$200,000 .

## How do you value a small business?

Here are the main methods. Asset valuation . For a simple business asset valuation , add up the assets of a business and subtract the liabilities. Price earnings ratio. The price earnings ratio (P/E ratio) is the value of a business divided by its profits after tax. Which P/E ratio to use? Entry cost valuation .

## What documents are needed to sell a business?

Documents Non-Disclosure Confidentiality Agreement. Personal Financial Statement Form for Buyer to Complete. Financial Ratios and Trends. Client List and Major Client Contracts . Corporate or Schedule C Tax Returns for Past 2-3 Years. Copies Proving Ownership of Patents, Trademarks and Other Intellectual Property.

## What do you do with your money when you sell a business?

Minimize Your Taxes on the Sale Structure the Transaction Beneficially. Seek Capital Gains Treatment. Take a Loss on Other Investments. Consider Tax-Free Investments. Remember Charitable Donations. Consider Gifts. Max Out Your IRA or Other Retirement Plan Contributions. Prepay Your State and/or Local Taxes.

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## What is the first step in selling a business?

10 Steps to Selling Your Company from Start to Finish Step 1: Define the Owner’s Goals and Potential Exit Strategies. Step 2: Determine a Range of Value. Step 3: Enhancing Value Prior to the Sale. Step 4: Gather Financial Information; Present Financials. Step 5: Compile Due Diligence Information. Step 6: Target Buyers. Step 7: Qualify Potential Buyers. Step 8: Negotiate the Deal.

## How much does a broker charge to sell a business?

Typically, a business brokers commission is between 5-10% of the business sale price. This varies depending on the expected price of the business and the amount of work the broker predicts is involved in the sale .

## How do I get rid of my business?

Close your business Decide to close. Sole proprietors can decide on their own, but any type of partnership requires the co-owners to agree. File dissolution documents. Cancel registrations, permits, licenses, and business names. Comply with employment and labor laws. Resolve financial obligations. Maintain records.