Buying or selling a business can involve a multitude of considerations and traps for the unwary. We have helped hundreds of business vendors and purchasers in Adelaide and country South Australia. Read our Client Reviews and then call us to speak with an Adelaide commercial lawyer with specialist business conveyancing experience on a no obligation basis.
We can help minimise risk and make sure you have the best tax and stamp duty position. We have been involved in all types of business sales and purchases both large and small. Our involvement can be limited to preparation or checking of documentation or much more comprehensive for more complex transactions. Talk to us on a no obligation basis and we can explain how we can help.
Due Diligence Considerations
It is important to seek advice at the earliest opportunity so that tax effective strategies can be implemented where possible and a number of other “pre-contract” issues can be addressed.
Undertaking an appropriate due diligence exercise is vital for a purchaser (even if they are already familiar with the business).
For purchasers it is important to take advice on the most appropriate structure (sole trader, company, trust or partnership) and what documentation should be put in place to document such structure (shareholder, trust or partnership agreements).
Form 2 Vendor’s Statement
The Land and Business (Sale and Conveyancing) Act 1994 provides that a Vendor’s Statement must be provided to a purchaser if the purchase price of the business is under $300,000 (not including GST, the price of land or stock included in the sale). The “Form 2” Vendor’s Statement must be in a set format and sets out prescribed information about the business including:
- The purchaser’s cooling off rights;
- The financials for the business over the last 3 years; and
- Land or leased premises associated with the business.
The correct ownership structure is important but also have a look at our Business Purchase Checklist article. Find out more
Business Sale Contract
Depending on the business being sold, an appropriate Business Sale Contract may deal with the following issues:
- Due diligence;
- Director’s guarantees;
- GST and stamp duty;
- Legal costs;
- Assignment of lease;
- Transfer of employees and entitlements;
- Apportionment of sale price between plant, stock and goodwill (this may have Capital Gains Tax consequences);
- Assets to transfer;
- Valuation of stock in trade and what stock is included;
- Adjustment of rent, outgoings and employee entitlements;
- Licence or franchise rights associated with the business;
- Restraint of trade and non-competition issues;
- Website, email addresses, phone and fax numbers;
- Business names;
- Intellectual property;
- Training periods;
- Debts and receivables of the business;
If the Contract has already been prepared we can check the document before you sign. We can also prepare all necessary contract documentation if required.
Adjustments of Business Outgoings
Once the Contract has been signed we can help with settlement arrangements between the parties and financiers. This usually includes transfer of associated contracts and leases and adjustments of outgoings associated with the business and/or the lease. One of the major adjustments may be employee entitlements for long service and annual leave.
Stamp Duty on Purchase of a Business
It is usual for the Contract to require the purchaser to pay stamp duty on the contract. Stamp duty is calculated on the purchase price of the business inclusive of stock and GST (although a business sold as a complete “going concern” may be exempt from GST). Use our Stamp Duty Calculator* to estimate stamp duty on the purchase price (*provided as a guide only and note that it does not cater for section 67 of the Stamp Duties Act or more complex transactions).
Stamp Duty Calculator
Read our Client Reviews and then talk to us about your business sale or purchase on a no obligation basis.