When selling your business, you will most likely need to transfer the business name to the new owner. However, the sale of business process can be detailed, and you need to follow it carefully to ensure you are not breaching your sale of business agreement. This article will set out the reasons why you need to transfer your business name and provide a step-by-step checklist to navigating the process.
Reasons to Transfer the Business Name
If you are selling your business, you will need to transfer the business name during the settlement process. Goodwill is often attached to the business name, since your clients recognise and associate your reputation with the name you operate under. This goodwill is often a large portion of the sale price.
Most sale of business contracts will include a clause about the business name and require you to apply to the Australian Securities and Investments Commission (ASIC) for an ASIC key, if you have not done so already. This forms part of the transfer process.
Typically, seven days before the settlement date, you must also apply to ASIC for a ‘Consent to Transfer Number’. You must then provide the number to the purchaser so they can complete the transfer. This is set out further in the checklist below.
Selling the Business Name
If you are selling your business at a value that includes goodwill, the sale price will often include your business name. This is because you cannot separate your goodwill from the rest of your business: it is tied to your business’ reputation and client base.
Your purchaser will typically want goodwill included as part of the sale if they want to continue your brand identity. Otherwise, they will simply be purchasing your equipment and assets. Your goodwill will benefit the purchaser in a competitive market, since you have an established business and client base. Goodwill also includes any intellectual property connected to your business, for example, trade marks for your business name, logo or slogan.
If you do not wish to sell your business name, think about your reasons for holding onto it so you can explain these to your purchaser.
The Transfer Process: A Step-by-Step Checklist
|1.||Access or create your ASIC Connect account.|
If you have not linked your business name, do so with your ASIC key. If you do not know your ASIC key, you can request it here.
Access the ‘Link a business/Request ASIC key’ option from the ‘Do it now’ menu. You will need to answer ‘Yes’ and enter your:
|3.||Ensure your email address is up to date and correct through the ‘Lodgements and Notifications’ tab.|
|4.||Select your business name. Select ‘Cancel/Transfer Business name’. Click go.|
|5.||Follow the prompts to transfer your business name.|
|6.||Make sure you review the transaction and complete your declaration.|
|7.||Check your details are correct. Confirm the transaction.|
|8.||Within 24 hours, you should receive a 13 character transfer number via email.|
|9.||If you have not received the transfer number after 24 hours, check your spam folder.|
|10.||If the transfer number is not in your spam folder, you can contact ASIC here. To speed up the process, inform them that:
You may be obligated to transfer your business name under the sale of business agreement, so it is important to follow this up to avoid delays in the settlement process.
|11.||When you have received your transfer number, you will need to send this information to your purchaser. They will then need to register the business name in their name.|
|12.||Once the purchaser’s transfer request is submitted, ASIC will cancel your registration within 28 days.|
After Transferring Your Business Name
If there is a renewal period on your business name, this is non-transferable. You will also not be able to receive a refund of your renewal fees.
For the 28 day period after you submit your transfer, two identical business names may appear on the register, reflecting both your ownership and the new purchaser’s.
Stopping the Transfer if Your Sale Falls Through
If your sale does not go through, you will need to cancel your transfer request within four months of the date of your application. If you do not, others will be able to register your business name.
To cancel your business name, you will need to contact ASIC. ASIC will not be able to stop the transfer if your registration has been cancelled or if the purchaser has registered, or applied to register, your business name.
If these events have not occurred, you can email ASIC at BN.firstname.lastname@example.org to request that the transfer is stopped. You will need to include:
- the transfer number;
- your business name; and
- why you need to stop the transfer.
ASIC will review your request and respond within five business days.
The sale of business process is intricate, including the process to transfer the business name. It is extremely important you follow the process carefully to ensure the transfer is successful and you comply with the sale of business agreement.
If you need assistance with selling your business, contact LegalVision’s sale of business lawyers on 1300 544 755 or fill out the form on this page.
Was this article helpful?
We appreciate your feedback – your submission has been successfully received.