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The Broker
NM - Scotland - "I incorporated my practice 3 years ago, however I am unsure of what exactly I am selling, shares or goodwill when the time comes?"
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A: When you sell an incorporated company in most cases you will sell 100% of the shares. Occasionally a purchaser may attempt to purchase only the assets of the company- this would leave you with the sale funds within the remaining shell company. You would have to get your financial advisors to explain how you would extract that to avoid tax consequences.
In the vast majority of sales, the purchasers will buy the shares, the majority of that value will be in the intangible assets in the form of the goodwill.The buyer will effectively purchase all of the assets and take on the liabilities of the company when they purchase the shares.
For example if the company has £9,250 in cash in the company the buyer will buy that for £9,250. You will have the advantage of only paying 10% entrepreneurial relief on that, if you had drawn it as a dividend your tax rate would have been much higher.