This is a mine field and you could write a book on this topic alone but our scope is to summarize and give you a good overview. Many of the structures will change as the business is larger so lets start in the smaller end of town the highest risk which is the sole trader and partnership if you are one of these businesses seek advice IMMEDIATELY! In today’s litigious world its not a wise move to continue in these structures. The majority of people will have a company of some sort and they vary in type from one country to another but are essentially similar with variations from a tax perspective. What is the most advantageous structure for you to sell your company? The answer will vary but we will come back to this later in the book.

Lets just cover the types of sales you will come across. An Asset sale – this is when the buyer will purchase the assets from you this may also mean the assets and liabilities. If this happens you will end up with a shell which is the company that you need to manage in some way either keep or close it. The next type of sale is a Stock or Share purchase when the buyer will purchase all the shares of the company so that everything the company owns will now transfer to the buyer which will now be the new shareholder/s. The definition of shareholder may vary it may be an individual, a group of individuals or a company. The larger the company the more likely the sale would be a share or stock sale as the transaction is less disruptive to the overall operation of the business in my opinion. For now its a matter of understanding the basics.

Is your current structure going to allow for a simple sale or a faster or slower sale when the time is right to sell. If you make some inquiries with a number of both legal and accounting advisers and just gather information so you are more informed. When you are about to sell then its way too late to make changes. Most likely your accountant would have along the way advised your the best structure in his or her opinion for tax purposes which may or may not be beneficial in preparing your company for sale.

Keep an open mind and try to look at ways that you can achieve both of setting the company up for sale and at the same time give yourself the most advantageous tax structure.

So what is the simplest and most advantageous business structure to prepare for sale and at the same time maximize your tax structure, this is not accounting or legal advise so seek your professionals advise for your situation this is just logical from a buyers perspective. There is a difference between legally minimizing tax and avoiding tax illegally. In the case of selling your business it will show greater value to a buyer if your can show easily that the business is more profitable.

We will discuss how to do this later!