Purchasing and Starting a Business

 

Accounting Tasman Ltd is able to assist with advising on a business purchase by going through a due diligence process.

This involves evaluating at least three years, preferably five years of financial statements to assess the viability of the business.

Advising whether the purchase price is reasonable based on the net profits the business has been making in prior years.

Checking lease documents as to when the lease/sublease period runs out, and whether there is likely to be an increase when it is renewed.

Check whether the amount of goodwill being asked for is in fact justified.

Determine the borrowing needed by the purchaser and whether there will be enough cash-flow to cover the interest/principal repayments, and also to provide a reasonable salary for the owner/owners.

Determine whether the goodwill relates to the previous owner or the business itself.  If it relates to the previous owner this may disappear once they have left the business.

Check on possible risks within the business eg age of debtors, whether employees will stay, any immediate fixed assets or repairs need to be done.

Decided on the best structure for the purchase ie company, partnership or sole-trader.

We can apply for an IRD number for your business and register for GST, and PAYE if employing staff.  Also incorporate a company if that is the best trading structure for you and your business.

 

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CHARTERED ACCOUNTANTS
Richmond, Nelson.