Key Accounting Steps to Take Before Selling Your Business

Selling your business is one of the most significant financial decisions you’ll ever make. Whether you’re planning retirement, moving to a new venture, or capitalising on growth, preparing properly can dramatically increase your sale price and reduce your tax bill.

At Welf Accountants, we regularly advise business owners on how to prepare for a successful exit. Below are the key accounting actions you should take in the months — and ideally years — leading up to a sale.

1. Get Your Financial Records in Order

Buyers will scrutinise your numbers. Clean, accurate, and well-presented financial records build confidence and increase value.

Before going to market:

• Ensure at least 3 years of up-to-date accounts

• Reconcile all balance sheet items

• Clear up historic bookkeeping errors

• Separate personal expenses from business costs

• Ensure VAT and PAYE filings are up to date

If your accounts are messy or incomplete, buyers may lower their offer or walk away entirely.

Businesses with clear management accounts and strong financial reporting often attract higher valuations.

2. Improve and Stabilise Profitability

Your business valuation is often based on a multiple of profits (such as EBITDA). Even small improvements in profitability can significantly increase your sale price.

Key actions include:

• Reviewing pricing strategy

• Cutting unnecessary overheads

• Reducing reliance on one customer

• Locking in recurring revenue contracts

• Improving gross margins

If you plan ahead 1–2 years before sale, you can position your business to achieve a stronger multiple.

3. Normalise Your Accounts

Buyers will want to see the true underlying profitability of your business. This means adjusting for:

• One-off expenses

• Personal or non-commercial costs

• Director salaries above/below market rate

• Unusual income items

This process is known as “normalisation” and is critical for achieving a fair valuation.

At Welf Accountants, we help clients present adjusted EBITDA clearly and professionally to prospective buyers.

4. Review Your Tax Position Early

Tax planning should start well before a sale is agreed.

Important areas to review include:

• Capital Gains Tax exposure

• Business Asset Disposal Relief eligibility

• Share structure and ownership

• Use of holding companies

• Timing of dividend extraction

For UK business owners, Business Asset Disposal Relief (formerly Entrepreneurs’ Relief) can significantly reduce Capital Gains Tax if conditions are met.

You can review official guidance from HM Revenue & Customs to understand the qualifying criteria — but tailored advice is essential to ensure compliance.

Leaving tax planning until after heads of terms are signed is often too late.

5. Strengthen Your Balance Sheet

A strong balance sheet improves buyer confidence.

Consider:

• Reducing unnecessary debt

• Writing off bad debts

• Reviewing stock levels

• Tidying up intercompany balances

• Clearing director loan accounts

A clean balance sheet reduces negotiation friction during due diligence.

6. Prepare for Due Diligence

Financial due diligence can be intense. Buyers and their advisers will request:

• Detailed management accounts

• Revenue breakdowns

• Customer concentration reports

• Aged debtors and creditors

• Forecasts and cash flow projections

• Tax compliance evidence

Preparing these in advance speeds up the process and prevents price chips later.

7. Review Working Capital Requirements

Many deals include a “normal working capital” adjustment.

This means:

• If working capital is below an agreed level at completion, the price may be reduced.

• If above, you may receive more.

Understanding your average working capital position helps avoid surprises at completion.

8. Consider the Deal Structure

Not all sales are structured the same way. The accounting and tax implications vary depending on whether the deal is:

• A share sale

• An asset sale

• A management buyout

• An earn-out arrangement

Each structure affects tax, risk exposure, and net proceeds differently. Early advice ensures you negotiate the right structure — not just the headline price.

9. Plan Your Exit Timeline

Ideally, business exit planning should begin 2–3 years before sale.

This allows time to:

• Improve profitability

• Restructure shareholdings

• Optimise tax planning

• Build recurring revenue

• Reduce key-person dependency

Rushed sales rarely achieve maximum value.

10. Work With Specialist Advisers

Selling a business involves accountants, tax advisers, solicitors, and often corporate finance professionals. Coordinated advice protects your position and strengthens negotiation leverage.

At Welf Accountants, we guide business owners through:

• Pre-sale financial preparation

• Tax optimisation strategies

• Forecasting and valuation support

• Due diligence readiness

• Post-sale tax planning

Final Thoughts: Preparation Drives Value

The difference between a well-prepared sale and a rushed one can mean hundreds of thousands of pounds in your pocket.

If you’re considering selling your business — even if it’s years away — early accounting and tax planning can:

• Increase your valuation

• Reduce your tax bill

• Prevent deal delays

• Improve buyer confidence

• Maximise your net proceeds

Disclaimer: The information provided in this blog is for general informational purposes only and does not constitute financial or tax advice. Before making any investment decisions or relying on any of the information provided, you should seek professional advice tailored to your specific circumstances. Welf Accountants accepts no responsibility for any losses or liabilities arising from the use of this information. Correct as of date of publication.