Does anyone know about buying and selling businesses?

[kitbit]

We are moving, and are also considering selling our business, an online retail business. I have a question... (well lots actually, but one in particular this morning!)...
If we sell it obviously any stocks and assets, client lists, the web site etc etc will all be passed over. What about money in the company bank account? When you buy a business do you buy the bank account too? How does that work?

The short answer is 'it depends'.

There are many ways this can work, with different tax implications. If you have an accountant, ask for his advice. If you don't, and there are significant amounts of money involved, get one now.

Is this a limited company, or a business you have run as a sole trader or partnership?

agree with pp, if you are selling a business you speak to an accountant FIRST. If they are to help you they need to know before the event when they can help structure the deal, not after when they have to sort out what you have done.

In general,
A company is a separate legal entity - if you sell it (ie you sell the shares) the company (and bank account) continues regardless. If you have significant money in the company you would be sensible to extract is before any sale.

If it is not a company (a sole trade or partnership) then you would be unlikely to transfer the bank account with the business.

We are in early stages and yes, definitely going to talk to our accountant!
It's a small limited company, 2 directors. To be honest there isn't much capital in the account anyway, but I just wondered whether it would be better to square it all off before selling or to leave it as it is. We have an amount of personal money invested (loaned) from the setup and although we had actually mentally written it off it could be repaid that way, maybe.

Thanks MrV and CS

In many cases when a business is sold the final agreed price paid is adjusted afterwards to reflect the actual outturn netting of current assets (i.e cash, stock and trade debtors) and current liabilities (i.e trade creditors, and accruals).

In particular, if you sold your business and one of the debtors failed to pay a bill then in some cases the bad debt would be knocked off the final price paid. It just depends on what is agreed in the sale process.

Normally, a better sale price is achieved for the business if the seller is willing to underwrite any risk that debtors will not pay.

Personally, I would also try to leave as little stock and cash in the business as possible by using up cash to pay creditors and running down stock before the date of sale. If there is a lot of cash in the business at the point of sale there may be tax implications so you should ask your accountant - as I am not one.

tbh if the purchaser has any sense they will want to buy the trade and assets (not the company - which has the potential for claims against it, and not any debts).

You on the other hand as the seller will want to get rid of the shares lock, stock and barrel (actually that depends on the tax position).

You need to ensure that your accountant is used to these sort of deals, if they are just a bog-standard accounts and tax return accountant then think about using someone else for this transaction.

Happily we are not in a position where people owe us money - our incomings arrive from people buying our products so that's good, but that's great advice about running down the stock and cash - and about the expertise required of our accountant. Are there accountants that specialise in such things, and is there a listing somewhere where I would be able to find some recommendations?

In fact, buying the trade and assets would actually be preferable for us rather than buying the company, as it would be simpler and more easily quantifiable.

not necessarily - because they buy the trade and assets off the company, and you are left with a company full of money which you need to extract (though there are ways and means).
No list as such - ask your accountant if they are used to this sort of deal, and if not ask them to recommend someone(s) who could help. Stress that you are happy with the service they have provided to date - but need to ensure that this is dealt with to your best advantage.

Great advice, thanks very much CS (et al)