Changing business ownership for sole traders

There are over one million sole traders in Australia. Sole trader ownership is all about striking out on your own, doing things your way and creating something extraordinary from very small beginnings. It’s the Australian way, and it’s one of the most popular business ownership structures in the country. In Australia, there are more than 2.5 million businesses operating today. Of those, around 27% of business have less than 4 employees and 61% are self-employed.

Even though running your own business can be a hugely rewarding experience, there may come a time when you want to sell your business, or transfer ownership to your family members, such as your children. Perhaps you’re retiring, or maybe you have another business idea in mind.

Whatever your reasons, if you decide to sell your sole trader business, it’s important to remember that selling a business likely won’t happen overnight. You may wish to seek the advice of a professional like an accountant or a business advisor to assist you with your sale. Nonetheless, it may be useful to understand the following actions to help you avoid any surprises and ensure a smooth sale.

Transferring ownership of your sole trader business in Australia

If you’re thinking of transferring ownership of your business, or have already made the decision, here are a few steps you can take to help the process move smoothly along.

Close your business

In the context of transferring ownership of your business, closing your business means paying any outstanding invoices (including building utilities and maintenance, unpaid business activity statements, final tax returns, employee entitlements, and instalment notices.

Inform key stakeholders and government organisations

It’s important that you keep all key stakeholders up to date about the sale of your business, including contracted staff, suppliers, as well as your external partners, such as legal advisors and tax accountants.

You will also need to update the relevant government bodies, including the Australian Taxation Office, the Australian Business Register, and the Australian Securities & Investments Commission within 28 days.

Transfer licences, permits, and lease agreements

For the new owner to be able to successfully acquire and operate your sole trader business, all lease agreements, permits and licences may need to be transferred to them. These transfers can take time to process, so it’s a good idea to process these transfers sooner rather than later. As part of this step, you may discuss the existing sole trader insurance you have in place to cover the business.

Business records and assets

There are important company assets that the new owner of your sole trader business will need to run the business. As part of the transition to the new owner, make sure that you provide the new business owner with:

• Business records (employee, financial and customer records).
• Intellectual property.
• Marketing assets.

Cancel your ABN

Once your sole trader business has officially been transferred to the new owner, cancel your ABN. Your existing ABN is not transferable to the new owner.

Sole trader business insurance

If you are considering purchasing an existing sole trader business, you’ll want to build your new business on a strong foundation. And a key part of doing that is protecting your new sole trader business by securing your sole trader insurance*. While BizCover do not have a specific type of insurance aimed just at sole traders, we do offer multiple insurance products – from Public Liability to Professional Indemnity insurance – from some of Australia’s leading insurers.

Compare business insurance quotes online or give us a call 1300 920 864 to find out how quick and easy it can be to purchase sole trader insurance with BizCover.