Plan your business affairs for taxation or plan for business sale – they are not the same ! - Succession Plus

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Plan your business affairs for taxation or plan for business sale – they are not the same !

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Plan your business affairs for taxation or plan for business sale – they are not the same !

By , August 28, 2009

Often as business owners we are advised to plan our business affairs to minimise the taxation impact and accountants often implement various strategies to reduce our profitability on paper and therefore the amount of tax that we ultimately pay. Unfortunately, whilst this may help in the short term, it has a significant negative impact when we are approaching a sale as the reduced profitability in our financial statements leads to a buyer reducing their valuation of our business – ie the price they are about to pay. It is often difficult to justify add backs and adjustments to our lodged accounts leading to a higher valuation as in the due diligence process buyers will inevitably return to our financial statements and accompanying tax returns for a true picture of our business performance.
The issue then is really timing and a quote from Thomas Dewar – ‘The only thing that hurts more than paying income tax is not having to pay any at all ‘ – is highly relevant.

Read More how to avoid capital gains tax

Craig West

Craig West

Managing Director | Succession Plus

Craig West is a strategic accountant who has over 20 years’ experience advising business owners. His background as a CPA in public practice, provided invaluable experience in the key issues of concern to business owners. Following 6 years of study to gain two masters degrees, Craig focused on Capital Gains Tax (CGT) for business sales advising on strategic management of tax issues. This experience formed a very strong view that business owners (and often their advisers) were unprepared and unaware of the steps required to prepare a business for exit.

Craig now acts as a strategic mentor for mid-market business owners and has written four critically acclaimed books on employee incentives, succession planning, asset protection and exit strategies. Craig has conducted numerous seminars and keynote presentations throughout Australia & internationally, including adviser education programs for the Institute of Chartered Accountants and CPA Australia.