Business transfer, namely, buying an existing company, is an alternative way of starting a business. It is often more advantageous than starting from scratch. Many business owners don’t have a succession plan in place. Some are reluctant to take time away from running their business, while others find the prospect daunting on both a logistical and psychological level. But don’t put it off. Experts agree that advance planning for a business transfer is a key aspect of sound management.
There are many advantages to having a succession plan in place:
1. It increases the value of your business, as it sends potential buyers the message that the long-term success of your business is a priority.
2. It allows you to better assess tax impacts on your personal assets.
3. It allows you to reduce the risk of financial instability during the transition.
Conduct a business valuation
Once you've chosen a successor, you need to set a selling price for your business and consider the tax impacts of the transfer. This means conducting an objective valuation of your business.
There are three approaches:
Asset approach;
Market approach (your selling price compared to the competition);
Income approach (based on your cashflow).
Barriers to Business Transfers
The main barriers to successful business transfers relate to planning and management. They include:
awareness-raising for better planning and preparation;
quality of support and advisory services;
quality standards related to the functioning of online markets and their inter-connectivity;
taxation (especially retirement tax relief, re-investment tax relief, sale to employees' tax relief, and double taxation of cross-border inheritances).
a lack of evidence and the need to harmonize data collection for better policy making.
Contact Us
If you have further inquires, please do not hesitate to contact Tannet at anytime, anywhere by simply visiting Tannet’s website www.tannet-group.net, or calling Hong Kong hotline at 852-27826888 or China hotline at 86-755-82143422, or emailing to tannet-solution@hotmail.com. You are also welcome to visit our office situated in 16/F, Taiyangdao Bldg 2020, Dongmen Rd South, Luohu, Shenzhen, China.
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