Sell Your Business FAQ Guide By SOT Business Brokers Perth
Want to sell your business? The team at SOT Business Brokers Perth have put together a handy FAQ guide that is a must read for anyone looking to sell a business. Please contact us with any additional questions you may have.
I want to sell my business fast. How long will it take?
How fast a business sells depends on a number of factors including the industry, complexity, sale structure, and other factors including the size of business, sale price and more. You should allow at least 6 months for the whole process to sell a business. A good business broker will keep ads refreshed and offer additional marketing strategies to get wider reach if needed.
When is the best time to sell a business?
From a financial perspective, a business with stable and growing financials are understandably more desirable from a buyer’s point of view than a business in decline. But there are many personal factors which can influence an owner’s decision to sell. Read more about the best time to sell a business here.
Which business valuation methods do you use?
Valuing a business is a critical part of the sales process and to do it accurately and consistently requires experience, industry knowledge and the ability to analyse and closely examine all the factors involved.
Value can be determined by many factors including growth potential, cash flow, potential economies of scale, sector trends and activity, sustainable profit, asset value, financial history, location, competition, customer base, ongoing management, desirability and the economy.
The main business valuation methods include:
Multiple of earnings - mainly used for businesses with a record of sustainable profits.
Discounted cashflow - mainly used for large cash-producing businesses.
Asset value - used for businesses with a large tangible asset base such as property or plant.
Entry cost method - comparing the entry cost alongside the value of the business.
Industry precedent - some industries have their own unique valuation methods based on sector criteria.
Consider it from a buyer’s perspective where you can read more on the topic of how to value a business to sell here.
What documents do you need to sell my business?
Who will see these sensitive documents about my business?
All potential buyers are vetted for seriousness and are required to sign a NDA (non-disclosure agreement) to maintain the confidentiality of the sale. Once signed, the potential buyer will see a high level business summary (prepared by SOT Business Brokers) and are invited into our office to discuss the financials in more detail. Once an expression of interest (EOI) has been made, the buyer will begin due diligence to satisfy any questions they have.
Should I tell my employees that I want to sell my business?
As a general rule, no. Key employees may need to be in the loop, however too much advance notice comes with risk. It can trigger staff to leave if they feel their future is uncertain, your competitors may find out and your customers may start looking elsewhere. All these things can jeopardise a sale so you may be jumping the gun before a buyer is interested. Read more about this topic here.
What tax will I have to pay on selling my business?
The tax implications of selling a business will depend on your personal circumstances. Some form of tax is inevitable, and it is vital you get advice as early as possible. Ideally you should get this advice at the outset, as it can have an impact on how best to structure a deal/sale. Get professional advice!
Why use a business broker to sell your business?
A good business broker will simplify and destress the process of selling your company, enabling you to continue business operations without disruption. Discretion/confidentiality are key and allow you to run your business while getting you the best sale price. Business brokers are experienced in valuation, negotiation, mediation and transacting.
How will I know what is going on?
At SOT, we give regular updates to keep you informed at every stage of the sales process. No details about your business are ever given out without your express permission. You control who we talk to and what we tell them. We are accountable to you at every step of the way.
How do you find me a buyer?
Where to advertise your business for sale and how the sale is packaged and presented for high exposure is a critical part of the journey of selling a business. We work with top ranked websites selling businesses, ensuring your business is marketed to a large network of buyers. We have developed market leading, cutting-edge marketing initiatives which deliver results and have an active database of buyers and investors who are on the hunt for great business opportunities.
What are your business broker fees?
Our business broker fees are based on a win-win success model. We get paid when you do and the fee varies with the price of the business. Our success based fee ensures we have the incentive to get you the best possible price and unlike many business brokers, we don't make money on excessive up-front fees. We do charge some basic marketing costs and our fee structure is transparent and fully inclusive. We have solutions for all business sizes and we will agree our fees with you in writing at the outset so we can both concentrate on selling the business.
Is there a contract I need to enter into to sell my business?
Listing agreements with SOT are for 6 months and some businesses will benefit from extending the contract after this initial period. SOT are members of the Australian Institute of Business Brokers and a signed listing agreement is the first step in authorising us to act on behalf of your business.
What is vendor finance?
Vendor finance is when the seller of a business funds part of the business sale instead of the buyer going down the route of traditional lending. Typically the buyer will pay part of the price upfront and the finance terms are arranged via contract privately rather than through the banks. The buyer pays off the purchase price of the business (including interest) via instalments to the seller (vendor). Vendor finance is used more often than you might think to achieve a better deal for both parties. Buyers see it as a way to reduce risk and it enables them to buy a business they might not otherwise have been able to finance. Sellers use it to access a wider pool of buyers and to achieve a faster sale at a higher price than they may have been otherwise offered. Read more about vendor finance here.
Got any questions? Contact SOT Business Brokers Perth today.
Buy a Business FAQ Guide By SOT Business Brokers Perth
Want to sell your business? The team at SOT Business Brokers Perth have put together a handy FAQ guide that is a must read for anyone looking to sell a business. Please contact us with any additional questions you may have.
Why buy a business that already exists instead of starting one from scratch?
What you are buying is a proven track record. An existing business has infrastructure, financial history, brand power, assets, staff and more. Some estimates say that one in three new small businesses in Australia fail in their first year of operation and two out of four by the end of the second year. By understanding the history of an established business, you are mediating the risk of starting from scratch. Read more about the benefits and disadvantages of buying a business vs starting one here.
The business sounds great, so… why are they selling?
The reasons for sale differ from business to business but don’t be afraid to ask us why the seller has decided that now is the right time to sell. Some owners wish to retire in the near future, others are relocating out of Perth. Some sellers simply had an end goal to sell after they had built a successful business – allowing them to move on to another venture. Sure, some owners wish to sell when their business when it is in financial decline, however potential buyers will be made aware of this. We operate with full transparency and in order to sell a business, we require a seller to provide full financial information which is available to potential buyers after they have been vetted and signed a NDA.
Is buying a franchise a good idea?
There has been a boom in franchising in recent years – you can find a franchise for sale in almost every industry. Unlike setting up your own business, when you buy a franchise the franchisor owns the brand, intellectual property and associated operating systems. You will benefit from a well-known brand, typically with a long history and a good reputation. The business model is established, so you will get access to refined procedures, operating manuals, stock control systems, financial systems and more. Franchises also tend to have good initial training, ongoing support and assist with marketing/advertising. There are many benefits and disadvantages of buying a franchise, read more on this topic here.
When can I see the financials?
The majority of sales with SOT Business Brokers Perth are confidential sales and as such potential buyers are vetted to ensure they are serious and then they will be asked to sign a NDA (non-disclosure agreement). Once signed, you can review the business summary with headline financials. If you’d like to see the full P&Ls and financial picture, simply get in touch to arrange a meeting with one of our business brokers.
How to value your business – what is your calculation method?
SOT Business Brokers Perth has a highly experienced team with strong financial backgrounds. The discounted cash flow valuation is still the most common methodology used when determining how to value a business and we review in detail the P&Ls (profit and loss statements), cash flow, asset and equipment value. We also take into account industry trends and competitor influences. Consider a buyer’s perspective on valuation here.
How do I make a formal offer to buy a business?
An offer is formalised with an ‘expression of interest’ form which we will supply you with. This is a non-legally binding document but ensures everyone is on the same page. This outlines what an offer will be, along with any terms and conditions that would be included/excluded with the sale.
What happens if my offer is accepted?
If an offer is accepted a deposit is payable and a settlement date is set. Due diligence is completed subject to the buyer’s satisfaction. Depending on the business this could be very simple or more complex for larger businesses.
What is due diligence and who is responsible for it?
The buyer can ask any questions they would like to understand the full business picture and get the confidence they need to continue the business. For example; can the claimed revenue and profit be verified? You may also wish to see legal agreements such as licences, permits, insurance policies, lease aggreements, employee contracts, supplier contracts and more. The seller is responsible for collating any additional information that the buyer requires. A solicitor and accountant can be engaged at this point for any professional advice. How long the due diligence process takes really depends on the business but you should allow roughly 15-30 days minimum.
What other costs need to be considered apart from the purchase price?
Does the purchase price include SAV (stock at valuation)? Note that the calculation uses the wholesale value. Other costs to be aware of include; stamp duty, fees for any third parties you engage such as an Accountant or Lawyer, assignment charges (lease application fee, assignment fee, rental bond, franchise application fee, training fee), loan establishment fees, initial working capital and more.
Can SOT Business Brokers help with financing?
We can put you in touch with people who may be able to help, just let us know if you’d like some recommendations.
Can SOT Business Brokers support with taxation and succession planning?
Yes, SOT are partnered with Forrest Private Wealth who are a highly experienced team of financial planners who can advise in taxation and succession planning. Many businesses leave it till a crisis has occurred before succession planning is considered. You may be in a great partnership now but what if things change down the track? Start the important conversation while everyone is happy and on the same page.
Got any questions? Contact SOT Business Brokers Perth today.
Selling Your Business: How & When To Break It To Your Employees
Should you tell employees you are selling your business? The short answer is no, but the team at SOT Business Brokers Perth have put together some guidance on how and when to break it to your employees when selling your business.
If you are considering selling your business, you don’t need to immediately inform staff. In most cases, it is better to wait until a deal is signed before letting staff know. Too much advance notice comes with risk – it can trigger staff to leave if they feel their future is uncertain, your competitors may find out and your customers may start looking elsewhere. All these things can jeopardise a sale so you may be jumping the gun before a buyer is interested.
So as much as possible, it’s important to delay the announcement of the sale until the deal is in the final stage. You may need to bring a few key employees in on your plans to support in provide certain information for prospective buyers – for example financial records, marketing and product metrics. Consider an incentive if they personally help to close the deal. Stress to these employees that the sale is confidential and not to be discussed until you give them the all clear.
When it is time to tell employees that you are selling your business, address the positives of new ownership:
If staff find out you are looking to sell without hearing from you first, it’s advisable to arrange a meeting face to face to discuss the plans and let them voice any concerns. Do it sooner rather than later before rumours take hold. If in the early stages, you can emphasize to staff that:
There a legalities involved with relation to staff and selling a business and you should seek independent advice on this. For example, if your employees are to be transferred with the business, some items to consider:
Is it Better to Buy a Business or Start From Scratch?
Want to be your own boss but not sure if you want to start your own business or buy a business? It’s no secret that many new businesses fail within their first year. With that in mind, there can be many benefits to buying a business which is already established. The team at SOT Business Brokers Perth take a look at some of the benefits and pitfalls.
Business continuation without interruption
Buying a business saves time and stress by having a base to build from. Think about the investment needed (time and money!) to find the right premises, staff, equipment, suppliers and more. An established brand with all processes and procedures already in place is a great platform for a new owner to step in an continue the business ‘as is’ or use as a base to launch efficiency improvements.
Immediate revenue stream
An existing business has established customer networks in place – it has already tested the market and has a proven model. When starting a business from scratch there can be a significant period of losses until a strategy is refined to best acquire customers / generate sales. Some existing businesses have built up trust and loyalty with customers over many years and being able to leverage the goodwill of existing networks is a huge benefit of buying a business.
Less risk
A financial history can give insight into the future performance of the business, although it is not guaranteed. A business broker will be able to walk you through detailed financials to understand the wider picture. As it is considered less risky to buy a business with a long trading history, it can also be easier to obtain lending to buy a business as there is proof of earnings rather than projections.
Learnings and insight
When you buy a business you buy knowledge. Some businesses for sale at SOT Business Brokers Perth are only available to purchase because the owner is ready to retire after years of success. These owners have decades of industry experience and have refined proven business models. You can not only benefit from their knowledge on what works, but very importantly, what doesn’t. Mistakes can be expensive, learn from someone elses!
Value for money
The purchase price of a business for sale can often be cheaper than to set up from scratch. It is a good idea to forecast an accurate budget on set up costs – including fit outs, equipment, branding, design etc and compare accordingly.
Other considerations
Some disadvantages to buying a business is that it might not be exactly what you want – from decor to product offerings and more. Keep in mind you may also be inheriting any existing problems within the business. Starting from scratch allows you to put your stamp on a business and implement your exact vision.
It is important to understand the role of the owner/seller, particularly when you look at a small business for sale. Are they key to the success of the business? What will happen when they leave? It’s important to have adequate handover – your business broker can help negotiate a time period suitable for both parties. Keep in mind that people often do not like change – what can you do to minimise the risk of existing staff and customers leaving with new ownership?
To learn more about buying a business, get in touch with SOT Business Brokers Perth today.
Buy a Franchise - the Pros and Cons
There has been a boom in franchising in recent years – you can find a franchise for sale in almost every industry. Unlike setting up your own business, when you buy a franchise the franchisor owns the brand, intellectual property and associated operating systems. As a franchisee, you are given the right to use these business elements for a limited period.
Franchises come in various formats, sizes and fee structures with differing lengths agreements and terms and conditions. Most franchises (over 50%) are in retail, accommodation and food industries - familiar sectors that many people feel they understand intuitively. However, it is important to shop around when looking for a franchise for sale and get expert advice from people who understand franchising to assist you. A good business broker plus legal and financial professionals (lawyer, accountant) can help you to determine what suits you best and if you are getting a fair deal.
Before you buy a franchise you should:
Buy a franchise – the pros
Ultimately a franchise system can only be successful if its franchisees succeed, so the franchisor has a vested interest in your success.
Buy a franchise – the cons
There are arguably lower risks involved when you buy a franchise compared to starting your own business. But, like any business there are still risks with owning a franchise. Just like other businesses, franchised businesses (and whole franchise networks) can fail. Despite having a known brand and proof of concept, they can fail for the same reasons other businesses fail – lack of capital, economic downturn, changed customer preferences, increased competition, lack of management skills of the operator, poor customer service skills etc.
If you do want to buy a franchise, make sure you fully understand the advantages the franchise system will deliver. Some franchises for sale are available direct via the franchisor and many are listed with business brokers. Speaking with an existing franchisee will give you a different perspective and can be very helpful to understand the pros and cons.
To learn more about the franchises for sale with SOT Business Brokers Perth, get in touch today.
Vendor Finance is Not a Dirty Word
Vendor finance, also known as seller financing or owner financing, can be a very effective way to sell a business in the current climate. It does however come with risks, so the team at SOT Business Brokers Perth explore some of the benefits and drawbacks.
What is vendor finance?
Vendor finance is when the seller of a business funds part of the business sale instead of the buyer going down the route of traditional lending. Typically the buyer will pay part of the price upfront and the finance terms are arranged via contract privately rather than through the banks. The buyer pays off the purchase price of the business (including interest) via instalments to the seller (vendor).
A worked example:
John wants to sell his café for $280-$300k. A very interested buyer has assessed their lending options and the maximum they can offer is $220k for the business. They simply can not get any more funds from any lender. This is much lower than John wants to accept. John offers vendor financing for a purchase price of $290k. The buyer pays John a $110k deposit and the remaining $180k is paid off in instalments over the next 24 months, at an interest rate of 6%.
Why can’t the buyer use traditional lending?
It’s no secret that the current lending landscape has become more difficult. In fact, it's harder to get a loan in Australia now than it has been in years, possibly ever. Why? In recent years, the big banks have been hit by both the financial services royal commission and the media for lax lending standards. As such, changes have been implemented by the Australian Government to ensure the financial system remains strong. Great in theory, however the reality is that lending is much more difficult for your typical business buyer. This is especially true if the business for sale has no/limited tangible assets such as machinery or vehicles.
For buyers who are older and have assets/capital to leverage, it can be easier, however younger buyers without significant wealth creation are really suffering. Business brokers in Perth are seeing some deals fall through at the financing stage and for those who can get lending, the process often takes longer than previously. Lenders ask more questions, insist on more documents and have more hoops to jump through than ever.
Why take on the risk of vendor finance?
Vendor finance is used more often than you might think to achieve a better deal for both parties. Buyers see it as a way to reduce risk and it enables them to buy a business they might not otherwise have been able to finance. Sellers use it to access a wider pool of buyers and to achieve a faster sale at a higher price than they may have been otherwise offered. In today’s complicated lending landscape, buyers who can get loans are frequently getting less than they ask for and this shapes their offer to buy a business. The seller can of course accept a lower than anticipated offer, however, vendor financing can allow a higher purchase price to be agreed. Vendor finance can not only prevent a deal from falling over, but the vendor also earns interest on the loan.
What risks are involved with vendor financing?
If the buyer defaults on its agreed repayments, there is financial risk to the seller providing vendor finance. There are a number of effective methods for minimising the risk, including:
Vendor financing is generally not recommended if the business has a history of low profits and poor cash flow.
If you have any questions about vendor financing, please get in touch with SOT Business Brokers Perth today.
Disclaimer: The information contained in this article is general information only and is not a substitute for legal advice. You should always consult your own legal advisors to discuss your particular circumstances.
You The Boss! Perks of Owning a Business
Want to buy a business and be your own boss? The team at SOT Business Brokers Perth have detailed some perks (and downsides!) of owning a business.
Answer to yourself and own your destiny
You’re the boss, you make the calls. Your decisions are never under scrutiny from above and this can be incredibly freeing. Who hasn’t worked under an awful boss before?! And let’s not forget that you choose who to hire (and fire). You can surround yourself with talented staff who support you, keep you optimistic and make work enjoyable. You direct the company culture. You are in control.
Satisfaction
When our business brokers meet with potential clients who wish to sell a business, the pride and joy that comes with owning a business is often very obvious. We love to hear the personal background stories and their journey to success.
The satisfaction and fulfilment that comes with having ideas be implemented from conception is huge. Business owners find it incredibly empowering to take inspirations into fruition. You can help people by providing a needed/wanted product or service and be a part of an industry you feel passionate about. Watching your business grow and change under your direction is very satisfying indeed.
Lifestyle flexibility
You dictate what hours work best for you and the business. Maybe starting after the school run works perfectly well and gives greater work/life balance than a traditional 9am-5pm role. Working from home more might be an option too. Having flexibility counts for a lot.
If you’d like to buy a business which allows for flexibility on hours, talk to a business broker to see which businesses fit this requirement.
Financial reward
Sick of making money for someone else? Well, it’s time to reap the reward of your own hard work. You can generally make more money by owning a business than being employed within that same business. There are also potential tax benefits to be considered.
When buying a business you will have access to full financials (under NDA) so you can understand the historical performance of the business and set expectations around future performance. A good business broker will walk you through the financials in a manner that is easy to understand.
Personal growth
Being responsible for something start to finish is a sure fire way to explode personal growth and development. Every day comes with new challenges and will be a learning curve. Sure, you are guaranteed to make mistakes along the way, that’s all part of the process. Never let the failures get you down and stop you from trying new approaches. Push through your comfort zones and make that dream a reality.
On the flipside, owning a business can at times comes with stress and the undeniable fact that the business success starts and stops with you. For some people stress is part and parcel with any job and owning a business is no different from that perspective. As a business owner you are also responsible for the wellbeing of your staff. There is also the financial risk to consider, however no great reward comes without risk. If you are super averse to risk and thrive off 100% stability and consistency, full time employment can be more suitable in many cases. Many people thrive off routine and performing the same tasks day after day. Others love the variety that comes with owning a business.
At SOT, we have businesses for sale in all industries and varying sizes. See our full list of businesses for sale here. If you have any questions or would like to learn more about buying a business, get in touch with SOT Business Brokers Perth today.
COVID-19 Business Support Recap From SOT Business Brokers Perth
The COVID-19 pandemic is impacting small businesses on a large scale. The brokers at SOT Business Brokers have put together a recap of the support available for businesses (and their employees) via Government initiatives.
Small business tax benefits
Instant asset write-off threshold increase from $30k to $150k for small businesses
Own a small business with aggregated annual turnover of less than $500m? You may be eligible for an instant asset write-off on assets of up to the value of $150,000. This amount has been increased from $30,000. The time period applies from 23 March 2020 until 30 June 2020.
The measure applies to new or second-hand assets first used, or installed ready for use, between 12 March 2020 until 30 June 2020 (inclusive). Certain assets are excluded, for example, horticultural plants and capital works deductions.
The threshold applies on a per asset basis, so eligible businesses can immediately write-off multiple assets.
This initiative will mean an additional 5,300 businesses who employ around 1.9 million Australians will be able to access this concession for the first time.
Apprentices and trainees
From 1 January 2020 to 30 September 2020, if you are an eligible employer you can apply for a wage subsidy of 50% of the apprentice’s or trainee’s wage paid during the 9 months from 1 January 2020 to 30 September 2020. Where a small business is not able to retain an apprentice, the subsidy will be available to a new employer. Employers will be reimbursed up to a maximum of $21,000 per eligible apprentice or trainee ($7,000 per quarter).
An eligible employer must have less than 20 full-time employees. The apprentice or trainee must be in employment with the business as at 1 March 2020.
You can register for the subsidy from early April 2020. Final claims for payment must be lodged by 31 December 2020.
Cash flow boost for employers
With cash flow issues hitting many businesses hard, the Government has announced a maximum payment of $100,000 and a minimum payment of $20,000. The purpose of this initiative is to help with cash flow in order to keep operating, pay bills and retain employees. This is available from 12 March 2020 for eligible small or medium business. Not-for-profit organisations and charities are also included.
How can you receive this relief? The ATO will pay this as an automatic credit to the business upon lodgement of your business activity statement. If this means you are eligible for a tax refund, the ATO will pay the refund within 14 days. You don’t need to fill out any new forms and the payments are tax free.
For more information visit business.gov.au
Temporary relief for financially distressed businesses
For owners or directors of a business who are currently struggling due to the Coronavirus, the ATO will tailor solutions for their circumstances, including temporary reduction of payments or deferrals, or withholding enforcement actions including Director Penalty Notices and wind-ups.
ATO relief for tax obligations
The ATO has committed to providing relief for certain tax obligations for taxpayers impacted by the coronavirus outbreak on a case-by-case basis. Relief includes the ability to defer payment of certain taxes for up to six months and allowing businesses to vary pay as you go (PAYG) instalment amounts to zero for the March 2020 quarter.
The ATO Emergency Support Infoline on 1800 806 218
JobKeeper payments
What is JobKeeper?
The JobKeeper payment is a $1,500 (gross) fortnightly payment per eligible employee of a business. The amount will be paid to the employer and is designed to assist employers to continue paying their employees. Eligible employers will receive payments from the beginning of May and payments will be backdated to 30 March 2020. The payments will be available for a maximum of six months.
Who is an eligible employer?
Employers
An employer is eligible if the business has turnover of:
Self-employed
If you are self-employed you can apply for the JobKeeper Payment if:
From 30 March 2020, you can register your interest to receive the JobKeeper Payment as self-employed via the ATO here.
Who is an eligible employee?
If you are an employee, you are eligible for the JobKeeper Payment if:
How does an eligible employer apply?
To qualify for JobKeeper Payment the employer must:
What does a business without employees (eg self-employed) need to do?
If you are self-employed without any employees, you will need to:
What payments will eligible employees receive?
If you’re an eligible employee, you will receive a minimum of $1,500 per fortnight, before tax.
Depending on your circumstances, you may receive $1,500 per fortnight in a number of different ways.
The following examples illustrate how the wage subsidies apply to payments to eligible employees, assuming the business qualifies for the JobKeeper Payment:
Example 1: Eligible employee who earns more than $1,500 per fortnight
Steve is an eligible permanent full-time employee receiving a salary of $3,000 per fortnight before tax and continues to be employed. Steve will receive the same salary, however, the employer will receive $1,500 per fortnight JobKeeper Payment to partially subsidise Steve’s salary as long as the business remains eligible. The business will continue to pay Superannuation Guarantee (SG) on Steve’s income.
Example 2: Eligible employee who earns $1,500 or less per fortnight
Claire is a permanent part-time employee earning $1,000 pf before tax and continues to be employed. The business will increase her wages to $1,500 pf and will receive $1,500 pf which fully subsidises Claire’s salary. The business must pay SG on at least $1,000 of Claire’s income. It may choose to pay SG on the additional $500 pf Claire receives.
Is super guarantee (SG) payable on JobKeeper payments?
Your employer still needs to pay your compulsory super contributions known as the Superannuation Guarantee. However, your employer is not required to pay Superannuation Guarantee on any JobKeeper Payment that exceeds your original fortnightly pay.
For example, if your original fortnightly pay was $1,000 and you now receive the $1,500 fortnightly JobKeeper Payment, your employer is only required to pay Superannuation Guarantee on $1,000.
How is the payment treated for social security and tax purposes?
JobKeeper payment is treated as income for social security purposes and may impact eligibility for income support. It is expected that this payment is taxable income of the employee, however, this has not been clarified.
Can an employee be receiving both JobKeeper and the JobSeeker Payment from Centrelink?
Because the JobKeeper payment is assessable for social security purposes, individuals who start to receive JobKeeper will need to report any change in their income to Services Australia (formally Department of Human Services) within 14 days.
The current income test cut off point for JobSeeker payment is $1,086.50 pf for a single person with no dependants. This means that a single person receiving JobKeeper is effectively ineligible for JobSeeker payment due to the income test.
How do you know if your employer is eligible?
If your employer is eligible, they will notify you and all other employees who will receive the JobKeeper Payment.
What about eligible employees with multiple employers?
If you have multiple employers, only one employer will be eligible to receive the payment. You will need to notify your primary employer to claim the JobKeeper Payment on your behalf. If you claim the tax-free threshold with an employer, this will, in most cases be sufficient notification that that employer is your primary employer.
If your primary employer is eligible, you will receive the minimum JobKeeper Payment of $1,500 per fortnight from that employer.
Example – Anita works multiple jobs
Anita currently works two permanent part-time jobs, one at a retail store during weekdays, and the other at a café on the weekend. Due to the impact of the Coronavirus, the retail store has closed, and Anita has been stood down without pay under the Fair Work Act. Anita continues to work at the café delivering take-away orders. Anita can only receive the JobKeeper Payment once, from the employer from whom she nominates as her primary employer. As Anita only claims the tax-free threshold from her job at the retail store, this will be treated as her nomination of the retail store as her primary employer. Assuming the retail store is eligible for the JobKeeper Payment, they will pass the JobKeeper Payment on to Anita. So, she will receive $1,500 per fortnight before tax. During the application process, the retail store will notify the ATO that Anita receives the payment from them. The retail store is also required to advise Anita that she has been nominated to the ATO as an eligible employee to receive the payment. The café is not eligible to receive the JobKeeper Payment for Anita. The income that Anita receives from her job at the café does not change her entitlement to the JobKeeper Payment that she receives from the retail store.
COVID-19 Update From our Business Brokers
As we come into May, there is a little more hope and positivity in the air. Fortunately, Western Australia has been able to flatten the curve and restrictions are beginning to relax a little. This positive news is especially welcome for small businesses. Since the beginning of May, our business brokers have all experienced a sharp increase in buyer enquiries across all portals, which is an excellent sign that things are returning to normal.
Interestingly and perhaps surprisingly, our business brokers have seen pretty consistent demand across all industries. However, buyers are understandably seeking to minimise their risk. Businesses which are predicted to be especially popular include those featuring products or services for which there is an inelastic demand curve or recurring customers / revenue. Examples include:
The industries most likely to experience a decrease in demand include:
The increase in unemployment may also positively impact business sales. Business Broker Alex Stajka says, “Some buyers are looking to buy a job so to speak. They want to be their own boss and earn enough to pay themselves a decent salary. As such, owner operator businesses generating decent profit are likely to increase in demand”.
If you are considering selling, you may wish to take the opportunity of the current slower than usual pace to prepare your business for sale. Read our short guide on how to prepare a business for sale here, which outlines key areas of focus to get your housekeeping and documents in order.
It is important to have a clear record of how COVID-19 has impacted your business. Business broker Alex Stajka says, “The key here is to think like a buyer. What would someone who wishes to buy a business need to know about this period of unusual trading?”
It makes sense to keep track of:
Realistic valuations and structuring of sales are key in an environment such as now. Working with a business broker who understands their importance is critical.
Speak to a SOT business broker today for a free, no obligation appraisal to determine an estimated sale price.
We can’t predict what will happen next however we continue to work hard on behalf of our clients to get their businesses sold for the best price in the shortest amount of time possible. We are well placed to continue business operations and deal with enquiries online and by phone.
Get in touch now to discuss your options further.