Imagine a sole-trader whose earnings are c£45k wants to incorporate. They are a 'one-man band' type of business. How much effort do you put in to come up with a goodwill figure?
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As above. If there's some
As above. If there's some value in the business beyond just the owner doing work, then we'd probably plump for £10k. Not too high to be contentious, still gives nice little tax break for individual.
Certainly wouldn't waste time doing lots of different complex calculations.
Really comes down to the "personal" bit
With say a business with high value clients or contracts, a good business name and maybe uses or can use a contractor, then the goodwill could be worth the effort and with one guy I got £80K agreed with HMRC which was not far off the annual fees in year one.
I have another similar guy who works for financial institutions as a consultant but everything revolves around him so in his case the goodwill was pretty much all his, especially as the Ltd Company was also his name.
With others, I've not bothered, I always go for the CG34 agreement with HMRC first, so there are no surprises and heard of another accountant getting grief over £20K.
depends if there is any value or not
As Paul says depends if there is any independent goodwill distinct from the owner.
There would be if there was a list of customers/contracts in place etc as someone would pay to acquire this rather than go to the effort themselves/marketing to get it.
Though in most one man bands the business is the person and without them there wouldnt be a business so most have no goodwill value.
Is there any goodwill?
Would a third party ever buy the business if the sole trader was retiring?
Are there adverts on or off line that could generate work?
Is there a distinct business name, domain name and website?
Is there a database of clients and targets who have opted in to an email marketing system?
If the answer to all these is 'no' then there's probably no goodwill. full stop.
Mark