Buying an established business in Australia means paying for proven cash flow instead of starting from zero, but the price is only part of the deal. The three things that decide whether it is a good buy are due diligence (verifying the numbers and risks), structure (which entity buys it and how it is protected), and tax (stamp duty, GST and how the purchase price is allocated). Get those right before you sign.

Buying a business can be the fastest way to grow, and one of the easiest ways to overpay. You are buying someone else’s history, their contracts, their staff and sometimes their problems. In our experience working with buyers across Melbourne, the deals that go well are the ones where the structure and tax were sorted before the contract was signed, not renegotiated afterwards. Mina Baselyous, a Chartered Tax Advisor (CTA), CPA and Registered Tax Agent, advises buyers on exactly these decisions. This guide walks through due diligence, how to structure the acquisition, and the tax that quietly makes or costs you tens of thousands of dollars.

Asset purchase or share purchase: the first decision

Most small business acquisitions are structured as an asset purchase, where you buy the specific assets (goodwill, plant, stock, contracts) rather than the company that owns them. This lets you leave behind unknown liabilities and start with fresh cost bases. A share purchase, where you buy the company itself, is simpler on paper but carries every past liability with it, so it demands far deeper due diligence.

The choice affects your risk, your tax and your price. In an asset sale you generally step into new, higher cost bases for depreciating assets and can walk away from historical tax, litigation and employee issues. In a share sale you inherit the company’s entire history, including any hidden debts, so buyers usually pay less or demand stronger warranties. Which path suits you depends on the business, the seller’s tax position and how the two sides split the benefit, which is why this is a negotiation to have with your adviser early.

Due diligence: what you actually need to check

Due diligence is the process of verifying that the business is worth what you are paying and does not hide nasty surprises. At a minimum, confirm the reported profit is real and sustainable, that key customers and contracts will transfer, that staff entitlements are accounted for, and that there are no undisclosed tax or legal liabilities. Never rely on the seller’s summary alone.

The financial checks matter most. Look behind the headline profit for owner add backs (personal expenses run through the business, above market or below market owner wages) that change the true earnings. Confirm the figures against tax returns, BAS lodgements and bank statements, not just a spreadsheet. Then work through the non financial risks: lease terms and whether the landlord will assign the lease, customer concentration, supplier contracts, employee leave entitlements you will inherit, and any regulatory licences. As Mina Baselyous (CPA, CTA) says, the deals that hurt are almost always the ones where the buyer trusted the add back schedule without tracing a single number back to a lodged return.

How to structure the acquisition

The entity that buys the business should be chosen before you sign, because changing it later can trigger tax and duty. The right structure protects your other assets, positions you for the most efficient tax outcome, and sets you up for a clean exit down the track. For most established buyers this means a company, a discretionary trust, or a combination, rather than buying in your own name.

Buying in your personal name exposes your home and savings to business risk and usually gives the worst tax result. A well chosen structure separates business risk from personal wealth and can access valuable concessions later: the small business capital gains tax concessions, available where the business has aggregated turnover under $2 million or maximum net asset value under $6 million as at the 2025-26 year (see the ATO small business CGT concessions), can save a future seller hundreds of thousands of dollars. Read our guides on business structures in Australia and company versus trust to see how the options compare.

The tax angle: stamp duty, GST and price allocation

Three tax issues quietly move the real cost of the deal. Stamp duty may apply to the transfer of business assets and varies by state. GST can often be avoided if the sale qualifies as the supply of a going concern. And how the purchase price is allocated across goodwill, plant, and stock changes your future deductions and the seller’s tax, so it is negotiated, not automatic.

The GST going concern exemption is the one buyers most often miss. Where the seller supplies everything necessary for the business to keep operating and both parties agree in writing that it is a going concern, the sale can be GST free under the ATO going concern rules, saving you funding the GST up front. Price allocation is just as important: loading value into depreciating plant gives you faster deductions, while goodwill sits on capital account. These are competing interests between buyer and seller, and the contract should reflect what you agreed. This is core tax planning territory, and getting it wrong is expensive to unwind.

Financing, valuation and the handover

Once the structure and tax are settled, the remaining questions are what to pay and how to fund it. Business valuation is rarely a single number: it is a range built from the sustainable earnings, the multiple a business like this commands, and the risk you are taking on. A sensible buyer also plans the handover so customers, staff and suppliers stay through the transition. Knowing how to value a business is just as important on the buy side as the sell side.

Fund the purchase in a way that keeps the business cash flow healthy rather than starving it from day one, and build a transition plan with the seller (a handover period, introductions to key customers, and vendor finance where appropriate to keep them invested in your success). Ongoing management reporting from the first month tells you quickly whether the business is performing to the numbers you paid for, which is exactly where a Virtual CFO engagement adds value. If you are weighing buying against building, compare it with our guide on starting a business in Australia.

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