Business Transactions: Selling Your Florida Small Business
Starting a small business is no easy feat. A word of advice for entrepreneurs; Start your business with the end goal in mind. For some entrepreneurs, the goal is leaving something for the next generation of their family. For other entrepreneurs, they are looking to sell their existing business and eventually starting a new one. If your goal is to go through the business path of selling your Florida small business, you suggest you should take the steps we will describe below.
- Business Valuation
Business valuation basically means determining your financials. Here is where you take time to figure out how much your small business is worth or determine the value of the business. According to an article in “Digital Exits” cited below, a business determines its worth based on a multiplier of its profit. Depending upon the situation, the business can be worth between 2 to 10 times its profit.
- Prepare Important Documents
Once you determine the value of your small business, have your CPA or accountant prepare the profit and loss statement.
Additionally, you will need to update the executive summary and business plan. The executive summary should reflect recent annual sales and number of employees. Don’t forget your tax statements dating back at least three years. Also, create a list of equipment and other assets that you intend to sell along with the business. Also include contacts, suppliers and vendors and any other paperwork such as leases and contracts which add value to your business.
If your business does not have these documents, selling the business may prove to be difficult. A qualified business transaction attorney can help you prepare these documents.
- Negotiate the Sell
Once offers come in from buyers, the negotiation process begins. Negotiate the best offer for both parties.
- Due Diligence
Just as if you were buying a business, allow time for a buyer to do their homework on your business. They will review your business’s financial health and history, determine the customer base and target market and best marketing options.
Buyers should be allowed at least three months to verify the financials and ensure that they are getting what they pay for, and making the best financial decision for them.
- Close the Deal
Closing on the business sale includes transferring ownership of your business to the buyer. This means signing contracts and beginning the handover process.
- Filing with I.R.S.
According to the IRS “Sale of a Business” webpage, because a business usually has many assets, they must be classified as capital assets, depreciable property used in business or real property. A business owner will realize capital gain or loss when selling a business. Paperwork will need to be filed to show that you no longer have ownership of the business.
Contact Our Experienced West Palm Beach Business Transaction Attorney for Selling Your Business
If you’re in the initial stages of selling your business, don’t do it alone. The West Palm Beach business transactions attorneys at Kelley Kaplan & Eller can help you with the lengthy process of selling and help you reach a favorable negotiation. Contact us for a consultation at 561-264-6850 to learn more.