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Depending the size of the business you are purchasing, it is prudent to consider any potential tax implications


Step four – due diligence The key to purchasing any business is to have information. N Legal would guide you through the due diligence process and this could determine whether you are purchasing a good business at the right price. What documents do you need for due diligence?


• Accounts from the last three years • Any management accounts • Cash flow statements • Full list of customer contacts • Lease or other property documents


• Existing contracts – can these be assigned to the new owner?


• List of liabilities • List of employees.


Feature


Step five – choosing a business vehicle A business can operate in one of three ways: as a sole trader, a partnership (including a limited liability partnership) or a limited company. Depending the size of the business you are purchasing,


it is prudent to consider any potential tax implications. If the business operates as a sole trader or a partnership, a buyer usually purchases the fixed assets that can include equipment, computers, vehicles and goodwill. The agreed price for fixed offers can be included in the buyer's capital allowances pool and allowances can then be claimed and offset against the new business' profits. The current tax on legislation (supplied by FOTAS tax specialists) is as follows:


• Annual investment allowance – 100 per cent for expenditure up to £200,000


• Writing down allowance – 18 per cent on expenditure exceeding £200,00 per annum


• Cars - CO2 omissions up to 130gm/km – 18 per cent allowance per annum over 130gm/km – eight per cent allowance per annum.


If you are purchasing the business through a company there are two alternatives:


• The buyer buys the fixed assets and goodwill as detailed above – this is an asset purchase


• The buyer buys shares from the seller – share purchase.


It is often found that once you have carried out a thorough due diligence you will find issues that can affect or improve the business and who is the key personnel of the business. N Legal will be able to guide you through any purchase. We also offer an additional free consultation should you wish to seek advice prior to making an offer.


Contact N Legal at www.n-legal.co.uk


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