Home – New Forums Money matters Splitting a business in two Reply To: Splitting a business in two

#1159628
nighttax
Member
  • Total posts: 172
Up
0
::
HAZSP, post: 184117 wrote:
Hi There,

I currently own a bushiness with another person with the shareholding 50/50.

He essentially runs one part of the business, and I run the other. The two operations of the business are very different, and we are basically running two totally different business under the one business name and pty ltd structure.

We are looking to split the business, so he owns the part he controls, and I own the part I control.

I am wondering what options there are in this regard, to reach the most tax effective outcome.

One option is for me to start a new pty ltd company, and he effectively buy my shares in the remaining company. I assume I could transfer assets at their written down value to my new company.

However, it seems that if you decide to split a company, there should be an easier way than for one party have to sell their shares and start a new pty ltd company.

I looked at demerging, but that doesn’t seem to work, as the demerged entity needs to have the same ownership.

Does anyone have any ideas on what options there are for splitting a company?

Cheers,
Ryan

Hello Ryan

Not a really big job but your question creates other questions. You should really have either a face to face or Skype meeting with your accountant to discuss the process.
Need to knows are:-
1. Did you guys buy the business or start it and the company from scratch?
2. Are there any assets in the company?
3. Is either of you expecting some value/payment for the value of the part that is not being taken by that person.
4. Is this simply – he does graphic design and you do coding/payment functions for web sites (or what ever) and each one of you is happy to just take what equipment he wants and needs for his area and you dissolve the company an open up the specialty in your own respective areas?
5. BIG thing – Is this a friendly split or hostile split?
6. Does the company have any debts and if so who will be taking them?

Regards
Evan