How to Sell Your Small Business

26 August 2022|Related :

Selling your small business can seem like a daunting task, especially if you’ve dedicated years of hard work building it from the ground up.

If the time has come for you to move on or retire, you’ll need to know everything about the large number of tax and legal implications involved in selling your business.

In this guide, we’re going to be explaining all you need to know to make selling your small business as stress free and straightforward as possible.

Consider Your Expectations and Set Objectives

To begin with, you need to think about exactly why you’re selling your business. Perhaps you’re ready to retire or eager to start a new business venture.

Maybe you have had issues with your business partner and want to step away or your profits have started to dwindle and you’re at risk of losing more money.

Whatever the reason you have decided to sell your business, you need to stay focused on your end goal every step of the way.

That’s why setting expectations and objectives is essential to helping you stay on track and reach your goals.

Preparing Your Business for Sale

To be able to sell your business, you need to ensure it is appealing to potential buyers.

Take some time to think about the answers to the following questions:

  • Have you got a strong team and structure?
  • Are there any current disputes with suppliers, employees or clients that need resolving?
  • Are all of your contracts and leases in order?
  • Have you reduced your personal expenses?
  • Do you have a strong position in the market?
  • Is there any equipment that needs to be fixed or replaced?
  • Are your accounts up to date?
  • Is the business premises tidy and attractive looking?
  • Have your profits increased recently?
  • Is your client base growing and loyal?
  • Is there potential for expansion?

Once you have answered the above, you need to think about the steps you need to take in order to make your business as appealing as possible.

Get a Business Valuation

Now it’s time to find out how much your business is worth. It’s important to remember that a business is more than just its assets.

Buyers will be considering your staff, revenue, liabilities, reputation and much more, all of which can affect the price when selling.

Although there isn’t a one size fits all rule for valuing your business, there are a number of ways in which you can estimate the market value.

Consider factors like:

  • Your business premises and surrounding property
  • Your staff
  • Existing debts
  • Ongoing contractual arrangements

If you are a limited company, you will need to think about whether you should do an asset sale or a share sale as these involve significant differences, especially on the tax you will need to pay.

When you have decided on the value of your company, you need to be able to justify the price to prospective buyers and prepare yourself for negotiations. 

Finding a Buyer

Once you have settled on a price, you need to find a buyer. 

To start with, you can identify and profile your buyers. You’ll usually have a good idea of who this is, however, it’s worth thinking about this in greater depth to narrow down the options.

There are a number of methods in which you can advertise your business for sale, such as through a business broker.

They can assist you in making introductions, hyping up the opportunity, creating bidding wars and managing the process to make it easier.

During this time, you should take steps to ensure confidentiality as this will help to shield your business against potential nosy competitors.

It’s also important to keep the sale relatively quiet to avoid causing unnecessary concerns about job security for your staff.

Once you do have potential buyers lined up, you should do extensive due diligence before signing your business over, making sure to do credit checks and seek references.

Terms of Sale

In order to ensure that all parties understand the terms of the sale, you need the details to be clearly laid out.

This should include the price, business assets and the date of which the business ownership will be transferred. 

By setting out the terms clearly, you can reduce the likelihood of misunderstandings and trouble further down the line.

Some things to consider when setting out the terms include:

  • How are you going to be paid? In full? In instalments?
  • If you’re getting paid in instalments, what will happen if the buyer defaults?
  • If you’re selling a partnership, or your share, how will the sale affect your partnership agreement?

Informing Your Employees

Once your sale is complete, the Transfer of Undertakings (Protection of Employment) Regulations 2006 may apply.

Where it does apply, your employees automatically become the employees of the incoming employer on their existing terms and conditions of employment (unless they are being made redundant).

Informing HMRC

If you will no longer be self-employed following the sale of your business, you will need to get in touch with HMRC to let them know so that they can cancel your Class 2 National Insurance contributions.

Your responsibilities differ depending on whether you’re a sole trader, in a partnership or a director.

Sole Trader

  • Complete your final self-assessment
  • Make sure to include the date you finished trading
  • Pay any tax and NI you owe


  • Complete a self-assessment if you’re selling your share
  • If you’re selling the whole partnership, you must complete the personal self-assessment and your nominated partner must also complete a partnership tax return.
  • Make sure to include the date you finished trading
  • Pay any tax and NI you owe

Limited Company

  • If you are selling the entire shareholding, you will need to appoint new directors prior to resigning.
  • You must notify Companies House of these changes to directors
  • If you’re only selling a part of your business, you must let your staff know about any changes that may impact them following the sale.

Get Expert Advice When Selling Your Business

At Ryans Chartered Accountants in Bolton, we can assist you with all of the above, helping you to value your business, find a suitable buyer and negotiate the sale.

Let us give you professional advice on how to manage your business sale.

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