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Selling a Business
Problem 1: Get Ready to Sell
To increase the chance of selling your business within the desired timeframe and at the price you want, you need to get it ready for sale. Generally, the sooner you start getting ready, the better.
Solution
Business sales readiness.
Outcome
An attractive business for prospective buyers.
Video Coming Soon
Mid 2024
Get Ready to Sell
Problem 2: Business Valuation
There isn’t just one way to value a business. Ultimately, what you want as the seller is a business valuation which is realistically achievable and prepared in such a way that will effectively help the buyer agree to paying it.
Solution
Realistic business valuation.
Outcome
Increased chance of selling the business at a fair price.
Video Coming Soon
Mid 2024
Business Valuation
Problem 3: Save Tax with the Small Business CGT Concessions
There may be very valuable tax concessions available if you satisfy certain criteria. This includes the possibility of an extra 50% CGT discount plus a part or full tax exemption. Forward planning is advised given things may need adjusting the year, or several years, before selling.
Solution
Forward tax planning.
Outcome
Bare minimum tax.
Read Key Points & Transcript
Saving Tax When Selling
video key points
- Smart and proactive tax strategies, implemented well in advance, can significantly reduce or even eliminate capital gains tax upon selling your business, allowing you to retain more of your hard-earned wealth.
- Utilising legal tax measures such as the Small Business Rollover and Retirement Exemption can result in substantial savings, particularly for those over 55, enabling full access to sale proceeds without the need for superannuation contribution.
- The introduction of a “bucket company” can spread and reduce taxes over several years, offering the opportunity to reinvest initial savings into wealth-accumulating assets like blue-chip shares.
- Forward planning, ideally a couple or more years before selling, is crucial to identify and implement the most effective tax strategies tailored to your unique situation.
- Preparation is key to ensuring a tax-efficient transition of your business, whether it’s being sold or passed to the next generation, and seeking professional guidance early can facilitate this process.
Presented by: Rama Yudhistira
video transcript
When it comes to selling your business, you want to make sure that you keep as much of your hard-earned wealth in your wallet.
Here at Munro’s, we are proud to have successfully saved our clients hundreds of thousands of dollars in taxes using smart and proactive tax strategies. We’ve done this through legal measures, to ensure that our clients can sleep peacefully at night.
Here’s an example of what’s possible.
In this example, our hypothetical client is selling their business, including business premises. Normally, this would trigger significant capital gains tax. However, through comprehensive research and analysis, we are able to help our client utilise both the Small Business Rollover and Retirement Exemption to reduce the capital gain tax down to NIL.
This is the perfect strategy for our hypothetical client since it also allowed them to access all of the sale proceeds because they’re over the age of 55 years, meaning they don’t need to deposit the sale proceeds to their superannuation account.
As another example, we might have a client selling their business who could benefit from the use of a “bucket company”. How so? By spreading out the taxes on the business sale over many years.
This not only delays some of the taxes, but also reduces them too.
In this example, the benefit to our hypothetical client could include their ability to use the initial savings to make investments in blue-chip shares, which then grow in value and allow them to accumulate more wealth.
Smart and proactive tax strategies are not limited to what we have just shared with you. The most important thing for you to understand is that often, to save tax, you need to be proactive.
A couple or more years before selling, you should instigate forward planning. This can allow sufficient time to identify the best strategies for your unique circumstances, as well as sufficient time to implement changes, if necessary, a couple or more years before sale.
So, if you have a business, naturally at some stage it will be sold or handed down to the next generation, and to achieve this in a tax effective manner we highly recommend you prepare in advance. Please feel free to reach out, we would love to help you.
Problem 4: What Next
As you approach selling your business and possibly coming into a large cash lump sum, you’ll need to consider how to set this up in a tax effective and financially prudent manner.
Solution
Retirement tax planning.
Outcome
Tax effective retirement.
Read Key Points & Transcript
What Next
video key points
- Retirement planning necessitates a focus on tax efficiency, especially during the sale of a business, aiming to minimise taxes both immediately and over the long term.
- A common strategy involves enhancing superannuation wealth, leveraging concessional and non-concessional contribution limits, and utilising special limits and the downsizer contribution limit, to benefit from lower or nil tax rates on superannuation earnings.
- Munro’s collaborates with clients and their financial advisors to craft a holistic retirement plan that meets income, wealth, and tax objectives, while also facilitating connections with trusted financial advisors for clients in need.
- The firm supports tax-effective estate planning, including the creation of a tax-effective Will, Enduring Power of Attorney, and Enduring Power of Guardianship, and advises on asset transfer to the next generation for benefits such as mitigating disputed estates, increasing capital assets’ tax cost base, and accessing Centrelink benefits.
- We act as a sounding board and trusted advisor, prioritising clients’ best interests and offering to embark on an incredible journey with those seeking an advisor that truly cares.
Presented by: Rama Yudhistira
video transcript
Planning for retirement is an important task that requires careful consideration and preparation.
A part of that planning, and eventual implementation, should be a focus on making things tax effective.
When you sell your business, not only do you want to minimise taxes during sale, you want to minimse taxes over the long-term.
For instance, if the sale results in a large cash lump sum, you want the income you generate from that over the forthcoming years to be taxed as least as possible.
A common strategy to mitigate taxes in retirement is to build up wealth in your superannuation account. This is because the tax rate on superannuation earnings may be nil or at a rate lower than your ordinary tax rate.
In the years leading up to retirement, your plan may include maximising both your concessional and non-concessional contribution limits. Around the time of sale of your business, if eligible, your plan may also include maximising special concessional limits. Later you might also utilise the downsizer contribution limit.
Ultimately, tax professionals such as ourselves can work with you in the lead up to, and during retirement, to effectively save you tax.
At Munro’s, we don’t provide investment advice, but rather work alongside you and your financial advisor to help with an holistic retirement plan that both achieves your income and wealth objectives, together with your tax objectives.
Where clients don’t yet have a financial advisor, we are able to introduce them to financial advisors we trust to do the right thing.
We also proudly assisted our clients with tax effective estate planning, which can include the outputs of:
- A tax effective Will;
- An Enduring Power of Attorney; and
- An Enduring Power of Guardianship.
During such conversations we also assist clients with considering whether any of their assets should be transferred to the next generation while they are still alive.
There are a few reasons why you might want to consider doing this, including:
- Mitigating the consequences of a potentially disputed Estate;
- Potentially increase the tax cost base of your capital assets; and
- Wanting to access Centrelink benefits.
While we leave the legal and financial advice to the experts, we will always be there as a sounding board – always truly looking out for your best interests as your Trusted Advisor.
If you would like an advisor that truly cares, we would love to hear from you and begin an incredible journey together.
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- Call Us 1800 818 924
- Email Us ExperienceSuccess@munros.com.au
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308 Fitzgerald Street
Perth WA 6000