Selling a Business Tax Implications
Selling a business gives you income and at the same time requires you to pay taxes. Although everything in life is taxed yet you should consider selling business tax implications.
The best thing to do is to inquire from the government about the taxes.
When planning to sell a business you should review all the tax implications available. Indeed, the tax codes are very intricate. That is why if you do not have any idea about taxes then you should hire knowledgeable tax advisor that can help you in the process. Obviously, you will encounter different issues about taxes when you sell your business. Basically, the government will view your income from the sale as capital gains or personal income. The tax for personal income is much higher than capital gains. This means that it is more advantageous to use capital gains when it comes to tax. However, it will be determined depending on the nature and structure of your business. In this sense, you should first identify the business structure so that you can easily know the tax implications.
Various Tax Implications
- Goods and services tax – the tax considered when selling continuing business is goods and services tax. Nevertheless, you should meet the conditions otherwise you can meet the implications if you will dispose your capital assets. If you are registered as GST then you should include the price of the assets you sell.
- Capital Gains Tax – This is a kind of tax charged for sale and disposal of assets. You should hire tax expert who can calculate the capital gain and the CGT concessions so that the CGT liability will be reduced.
- Private expenses – This tax implication is apparent when selling private company. All the advances, debts and loans of the shareholders are forgiven by the private company in order to enjoy the tax exemptions.
- Superannuation – In this tax system, significant changes is possible but is influenced on how you make use of the proceeds of the business sale.
- Independent contractor obligation – If you will sell your business make sure to finalize all the important tax issues that include fringe benefits tax, superannuation as well as eligible termination payments. This is necessary even if your business has been sold or ceased operation.
- Record keeping obligation – Keeping all the business records including the purchases, sales, payments to employees, sale of business as well as payment to other businesses should be kept. You can use it in reducing the tax payable.
Consulting a tax adviser can help you provide all the details regarding taxes. In this way you can have the chance to reduce the amount payable. Keep in mind that wrong assumptions is very costly. Likewise, selling your business is extremely complex in terms of the taxes associated with it.