Plan carefully for the sale of your business. Give yourself enough time to get your affairs in order. Use this handy checklist for organizational purposes.
* Make certain you are current with all your accounting records. Your bank statements should be reconciled, and your payables and receivables should be readily available.
* Make certain you have filed and paid all state sales tax returns.
* Make sure you have filed and paid all quarterly and annual state and federal payroll tax returns.
* Make sure you have filed and paid all state and federal corporate tax returns.
* If you are a corporation, make sure you have all your corporate minutes up to date. Have a special meeting where the directors and shareholders agree to put the company up for sale.
* Make sure your profit and loss statements and balance sheets closely agree with your tax returns.
* If you have contracts with customers and/or vendors, they need to be in alphabetical order for a prospective purchaser to examine.
* Make sure your employee records are in order. You need to have a W-4, G-4 and I-9 for every W-2 employee. If you use independent contractors, you will need to issue Form 1099 to each of them at the end of each year.
* Make sure you have filed and paid all quarterly state unemployment tax returns.
* Make sure all your insurance policies are paid up to date.
* Prepare short job descriptions for all employees.
* Prepare a short summary of what you do on a daily, weekly, monthly and annual basis.
* If you can, identify a strong employee who can take on more responsibility under a new owner.
* Prepare a short Executive Summary that explains why you started or bought the business, what you have done with it under your ownership and what a new owner can do to increase its value.
* Check with your CPA to see what the tax effect of selling your business will be on your personal finances.
* Engage a highly professional, highly experienced (10 years or more), highly competent, highly ethical business intermediary to assist you with the selling process.
* If you can, prepare a pro-forma budget that you know you will beat. If you beat it every month during the listing period, the buyer will believe your future projections.
* Be open to some amount of owner financing unless your tax returns are strong enough to obtain a Small Businesss Administration(SBA) or conventional loan.
* If real estate is included in the sale, obtain a current appraisal.
* Be willing to consider creative options to make the deal work such as earn-outs, moratoriums, royalties, balloon payments, extended amortization, etc.
Loren Marc Schmerler, CPC, APC is the former business advice columnist for Sam's Club. He has been a business broker since 1986 and works with business owners and business buyers in every state of the country. If you need assistance selling or buying a business anywhere in the United States, you can reach Loren at 404-550-1417, 24/7/365.
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