Building your business exit strategy well in advance
21 June 2022
If you are looking to exit your business or plan to do so in the future, you need a strategy. When you sell up, you want your business to have as much inherent value as possible in order to receive a good price, a great return on your investment, and the best possible payout.
So, how do you take yourself ‘out of the business’ as the founder, add the best value, and set up an effective and financially beneficial exit strategy?
Adding value to the company
The more attractive the business looks in the market, the better the price you’ll achieve, or the better the yield you’ll see on selling your company shares.
To drive that value:
- Work on the business, not in it – so you’re no longer a fundamental part of the day-to-day operations, and can focus on the higher-level strategic elements. We can help you restructure the operations so that your business stands up for a potential buyer, when you are no longer in it.
- Invest in adding value – keep profits in the business, reduce your personal drawings, and plough that money back into growth and investment.
- Improve your financial health – by taking control of your finances and building a strong balance sheet, positive cashflow and attractive profit forecasts. A buyer will want to see how your business has performed over the last two years.
- Have a business manual – that describes the processes and tasks in your business so a new owner can hit the ground running.
Talk to us about exiting your business
If you’re looking to sell up, you need a plan. Come and talk to us about creating a workable exit strategy, with a clear focus on driving value and delivering a solid return on your investment.
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As an employer, there are several obligations and expectations set by the Inland Revenue Department (IRD) that you must adhere to. Understanding these requirements is essential for maintaining compliance and avoiding any potential penalties. Let's take a closer look at what the IRD expects from you as an employer. Register as an Employer Before you hire your first employee, you are required to register as an employer with the IRD. This is a crucial first step in ensuring that you can meet all tax and payroll obligations. Accurate Record Keeping The IRD requires you to keep accurate and detailed records of all employment-related transactions. This includes: Employee personal details Wages and salary paid Payroll dates and methods PAYE deductions and remittances Details of benefits or allowances provided to employees Maintaining proper records helps ensure that you are reporting and remitting the correct amounts to the IRD. Deduct PAYE Tax You are responsible for deducting PAYE (Pay As You Earn) tax from your employees' pay. This involves calculating the correct amount of PAYE and ensuring it is deducted from each employee's salary or wages before their net pay is provided. Pay Employer Contributions In addition to PAYE, you may also be responsible for contributing to your employees' social security and retirement benefits, depending on the country you operate in. These contributions are typically paid in conjunction with PAYE tax. Issue Statements and Forms At the end of the tax year or upon employment termination, you should provide each employee with a statement showing their total earnings and PAYE deductions. Additionally, filing the appropriate end-of-year PAYE schedules with the IRD is required. File Employer Returns Employers are required to file regular returns with the IRD, which could be monthly, quarterly, or annually, depending on specific regulations. These returns should accurately report all payroll activities, including PAYE deductions. Handle Tax Codes and Changes It's crucial to apply the correct tax codes for each employee's circumstances. Any changes in employment status or tax code must be updated promptly to ensure accurate tax withholdings. Comply with Audit Requests The IRD may audit your business to ensure compliance with employer obligations. As such, being prepared to provide all requested information and records in a timely manner is vital. Adhering to these expectations from the IRD is not just about compliance; it's about fostering a transparent and trustworthy relationship with your employees and the tax authorities. If you need assistance with understanding or managing your obligations as an employer, consider reaching out to a professional accountant. Our team is here to help you navigate these responsibilities seamlessly, ensuring peace of mind and allowing you to focus on growing your business. Feel free to contact us for further information or assistance.
Thinking of starting your own sole trader business? The Sole Trader Toolkit from the Ministry of Business, Innovation and Employment has all the basic advice you might need.
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