How to prepare a service business for sale.

Start with the obvious gaps.

Before you talk to any buyer, assume they will ask for three to five years of financials, BAS, tax returns, accounts receivable and payable, contracts, leases, and licences. That is the standard due diligence list, and it is exactly where a messy sale starts to wobble.

This is also the point to check your tax structure, not after you have agreed a price. Small business CGT concessions still gate on the basic tests: aggregated turnover under $2 million, or net CGT assets of $6 million or less, plus the active asset test (active for at least half the ownership period, or 7.5 years if you have owned it more than 15 years). If the business sits in a company or trust, some concessions get harder to access without a "significant individual" holding at least a 20 per cent small business participation percentage at the right time, a trap for owners who assume a small business automatically means a qualifying structure.

One thing worth flagging but not relying on yet: the government has announced it will lift the turnover threshold for the 50 per cent active asset reduction from $2 million to $10 million, but not until 1 July 2027. As things stand, that is an announced policy, not the current rule.

Make the operating model easy to explain.

Buyers move faster when they can understand, in one sitting, how work comes in, who quotes it, who delivers it, and how cash gets collected.

If your business relies on trade or professional licences, map who actually holds them and whether they are tied to you personally, a nominee, or the company. It is a common gap: a licence can sit with one person and quietly become the biggest transition risk in the deal.

Tidy the financials and reduce owner dependence.

Buyers will normalise your profit to work out seller's discretionary earnings, so the cleaner your books, the better that number holds up. Reconcile your accounts, separate personal expenses, and keep evidence for any add-backs you plan to claim.

Payroll and super compliance is easier for a buyer to check than it used to be. Since Single Touch Payroll Phase 2, wage reporting is more granular, and from 1 July 2026 Payday Super requires super to be paid each payday instead of quarterly (a grace period applies for some employers until 30 June 2027). If your recent numbers straddle the super guarantee rate moving to 12 per cent on 1 July 2025, restate them properly before presenting "normalised" earnings, a buyer will do it anyway if you do not.

Staff liabilities need early attention too. Under the Fair Work Act's transfer-of-business rules, a new employer generally has to recognise your staff's prior service for core entitlements, but annual leave, long service leave, and redundancy can be treated differently depending on the deal structure. If a buyer does not recognise accrued leave, you pay it out as the seller, so know the numbers before you are at contract stage.

Use the right first step.

If you are not ready for a formal sale, a fit check is usually the best way to start. As a rough guide, Australian small business sales that need real preparation (licensing, payroll, owner dependence, staff liabilities) commonly take six to twelve months to get ready, and the sale process itself after listing often adds another six to nine months to settlement.

• Use the fit check to test scope.
• Use the valuation view if you want a broader sense of value.
• Link the discussion back to the most relevant industry page if needed.

The short version.

• Your prep pack should already cover three to five years of financials, BAS, tax returns, licences, leases, and core contracts before a buyer asks.
• Small business CGT concessions hinge on the $2 million turnover or $6 million net asset test, the active asset test, and, for companies and trusts, a significant individual holding 20 per cent or more. Do not assume a small business automatically qualifies.
• Map who holds your licences and whether the business can keep operating if that person leaves.
• Payroll and super compliance is easier to check than it used to be, and staff leave liabilities need pricing in early.