Hi everyone
I am just about to purchase the business I have worked for for 28 years, but we have come up with a stumbling block and wondered if anyone had any ideas.
The business is a car/cycle parts and accessory store and has been trading for 41 years. The cost of my purchase is approx 150k which I will pay 30k upfront and the balance will be paid out of the business profits over the following 5 years.
The owner also owns a number of properties including the shop which are included in the business. I am only purchasing the stock, goodwill, fixtures and fittings. We are being advised that having the properties in the business creates problems for my purchase. Legal costs go through the roof and the 20% corporations tax needs paying somewhere along the line (could be 10% if the properties were not an issue by taking advantage of entrepreneurs benefit allowance)
The only way forward is to make the company as it stands insolvent and create two new companies, one for the store and the other for the properties. Does anyone have any ideas of the cost of this procedure? We have had a few rough estimates of between 30k and 40k, which I feel is crazy. To take advantage of the entrepreneurs allowance I would pay 20k on day 1 of the new business (written agreement that the business is transferred to my name), after a year pay a further 25k to officially purchase business and only pay 10% corporations tax. What would be the legal implications of this?
Is there any other way of proceeding with the purchase?
Thanks for any advice given, any more information required please ask.
Phil
I am just about to purchase the business I have worked for for 28 years, but we have come up with a stumbling block and wondered if anyone had any ideas.
The business is a car/cycle parts and accessory store and has been trading for 41 years. The cost of my purchase is approx 150k which I will pay 30k upfront and the balance will be paid out of the business profits over the following 5 years.
The owner also owns a number of properties including the shop which are included in the business. I am only purchasing the stock, goodwill, fixtures and fittings. We are being advised that having the properties in the business creates problems for my purchase. Legal costs go through the roof and the 20% corporations tax needs paying somewhere along the line (could be 10% if the properties were not an issue by taking advantage of entrepreneurs benefit allowance)
The only way forward is to make the company as it stands insolvent and create two new companies, one for the store and the other for the properties. Does anyone have any ideas of the cost of this procedure? We have had a few rough estimates of between 30k and 40k, which I feel is crazy. To take advantage of the entrepreneurs allowance I would pay 20k on day 1 of the new business (written agreement that the business is transferred to my name), after a year pay a further 25k to officially purchase business and only pay 10% corporations tax. What would be the legal implications of this?
Is there any other way of proceeding with the purchase?
Thanks for any advice given, any more information required please ask.
Phil
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