Ownership of a business can change for a variety of reasons. You might buy out another partner’s share, sell a portion of your business to someone else or be in the process of selling your business in the run up to retirement.
Whatever the reason for the change of ownership of your business, there are a number of things you should keep in mind.
If the ownership of your business changes, the first thing you should do is notify your staff and shareholders. You need to let them know of the change to the management and running of your company and also keep them informed of any changes that directly impact them.
For shareholders, this is likely to be informing them of how their continued investment will work, or if the business is being wound up when they should expect to see their money repaid.
For employees, this could include the business being bought by another company, meaning a change in their registered employer and possibly changes in their working conditions, such as:
Staff also need to be informed if the transition of ownership, or selling on the business to retire, will result in redundancies. If so, staff should also be informed of the steps that will be taken as a result, ranging from consultations to when actual notice of redundancies will be issued.
Selling a business might change the way in which you’re taxed. For example, you might run a business as an entrepreneur and be classed as self-employed, meaning you might fill in a self-assessment form.
If you sell the business but then stay on in a senior or executive role, you may find you are now classed as an employee and your taxation falls under an automated system, which changes the way you pay your taxes. If you own multiple businesses, it is worth talking to an accountant to assess what steps you need to take to ensure you stay on the right side of the law.
If you’re selling a business to someone else with a plan to retire, you need to inform HMRC for a number of reasons. Firstly, to let them know you are retired and that tax responsibilities for the business have passed onto someone else, and, secondly, to transfer VAT registry to the new business owner.
There’s more to changing who owns a business than who owns what portion of a company.
Changing ownership can drastically shift how a business works, especially if it was set up by a group of people with different skills and experience. Working out how the gap left by someone leaving can be filled is crucial to ensuring that business is able to continue to perform.
If you are taking control of more of a business, for example, following a partner leaving, you need to assess how your responsibilities will change. Can you manage additional responsibilities or do you need to take on new staff to help you manage?
Perhaps someone selling their share of a business to you and leaving means you can’t offer a particular service or skill as effectively. This might influence the way you grow your business in future. Do you hire people to maintain that same level of service or do you gradually phase it out in favour of building up the remaining areas of the business?
Changing the ownership of your business can be influenced by many factors, from the type of business you run, to its size, and how the transfer of ownership pans out.
That’s where our FSB Online Legal Hub can help. This service provides a wealth of legal knowledge and information that can help you push your business to new heights, without being tripped up or slowed down by legal hurdles. Benefits of this service include:
To find out more about this service, please take a look at our FSB Legal Hub page. This service is included as standard in our Business Creation and Business Essentials packages.
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