Value Driver #2: Reliable Financial Data
Keep Clean Financial Records | The lack of financial integrity is one of the most common hurdles encountered during the process of selling a business.
Manage your business financials so they are transparent, reliable and up-to-date. Buyers want to see a detailed financial history in well-kept books and will not pay top dollar for mediocre records. To make sure your company remains attractive and can win top dollar when it is time to sell, here are nine tips for keeping your business in sale-ready shape:
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2011 Is Right Around The Corner
Less then five months to the largest tax increases in US History!
The following are just a few of the changes that will kick in and may affect you.
Capital Gains: The capital gains tax will rise from 15 percent this year to 20 percent in 2011. The dividends tax will rise from 15 percent this year to 39.6 percent in 2011. These rates will rise another 3.8 percent in 2013.
Personal Income Tax Rates: The top income tax rate will rise from 35 to 39.6 percent -- this is also the rate at which two-thirds of small business profits are taxed. Itemized deductions and personal exemptions will again phase out, which has the same mathematical effect as higher marginal tax rates.
Small Business Expensing: Small business expensing will be slashed and 50% expensing will disappear. Small businesses can normally expense, rather than slowly deduct, or depreciate, equipment purchases up to $250,000. This will be cut all the way down to $25,000. Larger businesses can expense half of their purchases of equipment. In January of 2011, all of it will have to be depreciated. |
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Tip #25: Excessive Personal Expenses Can Jeopardize Business Value
 Burying excessive personal expenses in the business financials can lower business value! The most popular method of valuing a business uses a multiple of earnings over a period of years. Business owners should be aware of that while attempting to reduce the bottom line with personal expenses to minimize taxes. Though there are a number of deductions that may be added back to determine true cash flow, not all add-backs are considered legitimate by buyers or lenders. Being too aggressive in minimizing taxes today may cost a business owner big dollars at closing.
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