This is a concept website · Enquire about this domain

businessopportunities.com.au

Buying an existing business, one tab at a time

A guide published by Dotto

Business opportunities: buying an existing business, step by step

Buying a business that is already trading means checking what it already carries before you sign: business.gov.au says to gather as much information as you can on the business before the contract, and to review its financial records, operations and legal documents. It also notes the other side of a ready-made business: outstanding contracts to deal with, or a poor public image inherited from the previous owner.

General information, not legal, tax, financial or workplace advice on any purchase. The official places to check are business.gov.au, the ATO, the Fair Work Ombudsman and ASIC.

An empty café after closing time: long dark tables, red-topped stools and framed prints on a stone wall.
A café after closing time. Photo by tianya1223 on Pixabay

The order things happen in

business.gov.au sets out six steps for buying an established business. The five tabs of this file sit where each one bites.

  1. Check you are ready

    business.gov.au asks a buyer to weigh the costs of running a business before looking at buying one.

  2. Find the right business

    Your interests and background experience, it suggests, can narrow the search to an industry that suits you.

  3. Do your research

    That includes talking to existing customers, employees and neighbouring business owners about how the business is doing.

  4. Value the business

    Its current value and potential growth, perhaps with a professional valuation of its assets and liabilities.

  5. Conduct due diligence

    The records, the licences, the lease, the debts.

    Tab 1: checks before you buy

  6. Make an offer, then a contract

    Once a price is agreed, a contract gives the agreement legal force. Business Queensland describes the documents on the way there: a letter of intent, a letter of offer and the purchase contract.

    Tab 5: the sale contract and cooling-off

Three more things travel with the contract. A GST-free going concern needs the GST position agreed in writing, staff who move across do so under rules in the Fair Work Act, and some registrations are made again in the buyer’s own name.

Five tabs in this file

  1. Checks before you buy

    Business Queensland says due diligence needs to happen before any contracts are signed, and can take a week to several months. What to look at, and how the looking is organised.

  2. GST and the going concern

    The ATO lists the conditions under which the sale of a business as a going concern is GST-free, starting with a written agreement made before the sale.

  3. Taking over staff

    The Fair Work Ombudsman explains when a change of owner is a transfer of business, and what that changes for the staff who move.

  4. Registrations that do not transfer

    An ABN, a business name, licences and the lease, each with its own route. ASIC, for one, sends the transfer number for a business name to its current owner, who passes it on.

  5. The sale contract and cooling-off

    From the first letter to the settlement date, what the contract usually sets out, and where a state’s cooling-off rule fits.

Assets or shares: two ways a business changes hands

Business Queensland names two main methods for buying a business, and the difference comes up again in the tabs on GST and registrations.

An asset sale

The buyer purchases the business’s assets, such as equipment, buildings, inventory, intellectual property and customer lists. The business entity stays with the seller, and debts around those items stay with the business.

A share sale

The buyer takes ownership of the whole business by buying the company’s shares: the assets and the entity, its trade names and its debts. Business Queensland says all rights and obligations of the business are included.

business.gov.au describes franchising as another option for someone who wants to buy an established business. This file stays with the second kind: a going business, bought from the person or company that runs it.