Liquidating your Business Assets Can be an Efficient and Prudent Exit Strategy
In today’s dynamic business environment you’re either Growing or Going…out of business that is! If you’re part of the latter contingent and have made the decision to get out of a business but are unable to transition your business internally or sell it as an intact entity, full or partial liquidation of assets may be an appropriate exit strategy. Asset liquidation can provide quick cash and assist in diversifying equity. However, before you terminate your lease, sell a key piece of equipment, or disconnect your utilities, make sure you have a well-thought-out plan.
Getting out of business successfully requires careful planning from start to finish. If you are looking at asset liquidation as a part of your exit strategy, consider incorporating the following recommendations into your plan to increase your chances for success.
1. Talk to your lawyer and accountant.
2. Establish the liquidation value of your assets; remember liquidation vs. retail value can differ substantially.
3. Identify the best venue and timetable to sell your assets.
4. Arrange the sale at the most appropriate location with an expert.
5. Use a non-recourse bill of sale.
Understanding and incorporating these steps into your exit plan will not only help you recover as much money as possible, they may also help you achieve the freedom needed to pursue new endeavors.
It is important to note that the recommendations discussed above are intended to serve as a general overview to assist with the asset liquidation process. It is not a substitute for case-specific advice that only your lawyer and/or accountant can provide. Also, depending on the situation and necessity of business divesture, the cooperation of creditors may need to be considered. Cover your bases and talk to the experts before liquidating any assets that may be in question.
Initiate the process by preparing a current inventory of your business assets. Include photographs, serial numbers and a brief description of the condition of each item if possible. A thorough inventory will save considerable time and expense as you navigate the sale process and can be invaluable if you are asked to provide documentation for creditors or the Internal Revenue Service.
Next, start preparing your assets for sale. To elicit the best offers, take care that you do not diminish the appeal of your most marketable items by lumping them in with outdated or worn-out equipment, furniture or inventory. In most cases the most lucrative value of these lesser items may be in the form of a tax deduction, so why not donate them to an appropriate charity?
Finally, don’t overlook your intangible assets. For example, is your lease assignable? Are the business licenses, permits, patents or trademarks that you hold in demand? Can they be transferred? Is there a market for your customer list, contract rights or accounts? You may need to check with your attorney or accountant to determine what information and agreements are transferable but once cleared these types of assets can also provide a substantial return.
We Buy Your Business (WBYB) provides cash offers for all assets in order to assist in the liquidation process. Please contact your WBYB representative for more information at www.WeBuyYourBusiness.com
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you've got it back to front. First you look for a niche in the market that needs to be addressed or you note a shortage of demand. If you are not addressing these keep your money in your pocket.
Business opportunities come from hobbies expanded, new technology (e.g. become the Blue Ray expert), niche markets e.g. something a cultural group wants or needs, changes in law create opportunities for experts to emerge, changes in demographics e,g, more children in the area.
Look around. Ask people around you.
How to start will depend on the idea – some businesses start part time until they get enough customers to move on – some start as web based businesses and others just have to bite the bullet and go bigtime. Whatever you do please do a business plan before you start – work out the details on profitability, time needed to make it work etc before you commit any money to the idea.
Need a great business plan format try. http://www.australiansmallbusiness.com.au/Easy-Business-Plan-Pack-p-16143.html
You need to keep accurate records when running a business. This will be your best defense if you ever get audited.
For IRS purposes, you need to make a profit every 3 out of 5 years to have the IRS prove that you are not running a business. Otherwise, it is up to you to prove that you are running a business and not doing a hobby. You can prove that you are running a business by keeping your business accounts and personal accounts separate.
You can write off any legitimate business expense including dinners with clients, car expenses, equipment, etc.
Having a separate checking account and credit card is a good idea. However, it isn't necessary. You can comingle your business and personal expenses using your personal accounts. But, if you do this, then it will be harder for you to prove that you are running a business.
For your revenues, you don't need a corporate account to make you deposits. You just need to make the deposits in your separate account that you use for business.
You can read Publication 334 for more information.