Hi, we are putting our business on the market and want to ask if a buyer gets any benefits from the carried forward loses from our first 2 years setting up the business. Thanks?

Hi mark.

It depends.

IF you traded using a company.....and IF that company hasnt applied the losses to assessable income in a subsequent profit making year.. .....and IF the purchaser is buying the company off you (rather than buying the "business" off the company).........then,yeah, probably.

BUT

in 20 years i have seen only ONE time that the trading company get sold rather than the business.......

I think you need to get in front on a good bean counter to doscuss this as well as all sorts of other issues such as capital gains and small business concessions there... .

Cheers

Bc

Hi Mark,

The business structure determines what is possible, and then the format of buying/selling the business.

While you might see a positive in selling a company (only structure that allows this type of loss carry-over) with retained losses, the buyer may not be so keen. Key issue in buying the company rather than just the business is the scope for litigation following the company. As a legal entity, the company get sued, but if the business is bought out of the company, the new entity (buyer) does not take on any litigation issues from previous owner.

Speak with your accountant, as should any buyer, so that all parties are aware of their options and the best decisions can be made.