Transferring Business Ownership
Posted 27 Apr 16
There are many advantages of running a limited company, including protection through limited liability, tax and national insurance efficiency and improved reputation.
However, some advantages come when you decide to invest in a different area of business or call it a day and sell your company. Transferring ownership of a limited company is much easier than an unincorporated structure.
Limited company requires at least one director and one shareholder to be registered with Companies House. In case of small businesses, these roles are usually taken by the same person. Although the act of transferring the company’s ownership is simple, the whole process starts much earlier and requires careful planning for the business to remain successful.
When making the decision of transferring the ownership of your company, it is crucial that you identify the best route for you and your business. The best way to do it is by hiring a professional business advisor like Tawanda Accountants who will be able to objectively evaluate your business aims and goals. Furthermore, choosing the right person to manage your business after you leave has a great influence on its future. The three main options most company owners consider are: transferring ownership to a family member, transferring ownership to a non-family member or disposing of the business through a sale, management buyout, management buy-in or voluntary liquidation. In order to pick the best option for you, you first need to clarify what are the intentions behind the transfer of the company’s ownership.
Why Planning is Crucial?
Over 50% of companies registered in the UK are family owned. However, the majority of these businesses have succession plans. The reason for lack of planning lies in the inability to choose an effective successor. Transferring ownership, especially within one’s family can be an emotional, complicated and overall stressful process, thus a lot of business owners ignore it until it becomes a pressing issue.
Dealing with a lot of responsibilities on a daily basis, a lot of business owners fail to make time to plan their succession with care. A lot of great companies go bankrupt or get liquidated after the first owner leaves.
Leaving succession planning until the last minute puts the whole business at risk of financial failure. A forced, pressured and panic decision may result in business being transferred into reluctant or unqualified hands.
The best way to ensure your business goes into the right hands and the goals and aims are pursued after you leave is by hiring a professional and experienced business advisor who will create a perfect strategy for your business. At Tawanda Accountants we ensure your business will not suffer after transfer of the ownership and instead, enter the new, exciting era. Choosing the right successor and the right time to transfer the business is the best way to ensure the ongoing success of your company. Contact us today to find out how we can help you.