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The Beal Business Advisor

June 2016

Contact Number:  204-478-7266
In This Issue
  • Upcoming Seminar! Maximize the Value of your Business
  • Buying a Business - Personnel
  • Selling your Business - Transaction Issue - Reducing Taxes via an Estate Freeze
  • Question of the Month - Operating Lease versus Capital Lease?
Upcoming Seminar!
Maximize the Value of your Business  
Beal Consultants is proud to present a seminar to maximize the value of your business.  Topics include: 
  • Selling on Non-Price Issues
  • How to Enhance your Business Value
June 2, 2016
8:30 a.m. - 10:00 a.m.
Doors Open at 7:30 a.m.
Muffins & Coffee will be served
Admission:  Free
Norwood Hotel, 112 Marion Street

Jack Penniston, Certified Business Coach & Sales Trainer with Focalpoint Coaching International will present on Selling on Non-Price Issues.  Come learn how you can sell on non-price issues and learn some of the key strategies for selling based on the real issues that cause people to buy.  Price arises early in almost every sales conversation, but price is seldom the reason that the customer buys or refuses to buy.
 

   
Steven Beal, MBA, CPA, CGA, CFA, CBV, CBI will present on How to Enhance the Value of your Business.  Steven will be sharing how to help you maximize business value now and in the future.  Specific topics include what drives business value, and how to maximize your business value.


 
 
 
For more information, visit our seminar website:
http://www.bealconsultants.ca/events/upcoming/

Space is limited!
You must reserve your seats.

Please RSVP by May 30, 2016
to Kim Edge
(204) 478-7266 (110) or email:
inquiries@bealconsultants.ca
    


Personnel  
Last month we discussed the importance of understanding financial ratios when you buy a business, this month we want to discuss personnel issues.

In many cases when you purchase a business, it includes a payroll with employees that will now be working for you. You will need to familiarize yourself with the organizational culture and structure. Some key questions include:

  • What are the job responsibilities, rates of pay and benefits of each employee?
  • What is each employee's tenure (length of time with the organization)?
  • What is the level of each employee's skill in their position and are they employed under an employment contract?
  • Will key employees stay after the business is purchased?
  • Are any employees part of a union, or is any union organizing effort likely?
  • Have there been layoffs in the past year which could trigger lawsuits?
Next month we will discuss patents.

In the meantime, if you would like more information on buying a business, contact us at 204-478-7266x110.
 

Transaction Issue - Reducing Taxes via an Estate Freeze
This month we will focus on a transactional issue - reducing taxes via an estate freeze. An estate freeze is a useful tool in transitioning a business to the next generation. It is typically used within a family transition, but the concepts could apply to an arm's length transaction.

An estate freeze is a basic share exchange. If you own a business worth a million, and you want to transfer it to your children, you can convert your common shares into preferred shares worth one million (less a dollar) and then sell 100% common ownership to your child(ren) for one dollar. This accomplishes a number of objectives:

  • In certain situations (ask your accountant), you can crystallize your gain for income tax purposes. In this situation, depending on the tax cost base of your shares, you could claim up to $750,000 each in capital gains, using your lifetime exemption.
  • Ownership of the future growth of the company will past to the next generation.
  • The preferred shares could pay a specific dividend, giving you retirement income.
This is a complex transaction; there is risk in executing it. Consult a competent tax accountant, lawyer and business consultant before attempting to do it! Next month: Why choosing a successor now can help you maximize the value of your business.

If you would like more information on selling or valuing a business, contact us at 204-478-7266x110.
 

Current Businesses for Sale

 

Winnipeg Meat Shop (NEW) 

 

Bathroom and Kitchen Specialists (NEW) 

 

Specialized Property Management

 

Transportation Company

 

Specialized Manufacturer

 

Home Renovating Specialists  

 

Rural Restaurant  

 

Metal Working Business

 

Indoor Tanning Salon 

 

 Fire & Security Business  

 

Winnipeg Auto Body Shop  

 

Industrial Land & Building for Sale - Suitable for Automotive - Conditionally Sold 

 

Cleaning Services Business  

 

Manufacturing Business  

 

Winnipeg Electrical Contracting Business  

 

Transport & Event Planner

 

BNI Manitoba Franchise - Conditionally Sold 

 

Pizza and Chicken Restaurant  

 

Winnipeg Used Book Store

 

Women's Clothing Store 

 

Seasonal Product Manufacturer/Contractor   

 

The UPS Store - Winnipeg Location  

 

Home Renovation Business

 

Profitable Resort 

 

Winnipeg Auto Repair Shop

 

Farm Parts & Recycling Business   

  

Auto Parts, Service and Recycling Business  

 

Profitable Winnipeg Automotive Services Center - Conditionally Sold 

 

Rural Automotive Repair Shop Location - Conditionally Sold 

 

Carman Property  

 

Franchise - Tanning Studio    

   

Thompson Hotel and Restaurant  

 

WOW 1 Day Painting Franchise    

 

  $$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$

 

To review any of these business profiles, please click  here .

 

$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$  

 

We do not advertise all of our listings to the public.

If you have a specific type of business in mind,

please call 204-478-7266 x110 to inquire!

 

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Quick Links

Beal Consultants Website  

 

Quote of the Month

 

"Winning isn't everything, but wanting to win is."  

   

Vince Lombardi  
Operating Lease versus Capital Lease?


There are two ways that a company can account for leases.

  • Operating Lease - finances equipment for less than its useful life, and at the end of the lease term the lessee can return the equipment to the lessor without further obligation.
  • Capital Lease - usually used to finance equipment for the major part of its useful life, and there is a reasonable assurance that the lessee will obtain ownership of the equipment by the end of the lease term.
What is the difference in the accounting treatment of these leases?

Typically businesses prefer to keep leases off their books and report all leases as operating leases. However, a lease should be treated as a capital lease if it meets any of the following four conditions:

  • The lease life exceeds 75% of the life of the asset.
  • There is transfer of ownership to the lessee at the end of the lease term.
  • The lease contains an option to purchase the property for less than fair market value.
  • If the present value of the lease payments exceeds 90% of the fair market value of the asset.
What affect does this have on my financial statements?

  • Operating Lease - the lease payments are treated as operating expenses and are recorded on the income statement. The operating lease does not show up as part of the capital of the company.
  • Capital Lease - the item is set up as an asset on the balance sheet and is depreciated over time; as well as the company will also recognize the lease payments as a liability. The present value of the lease expenses are treated as debt and the interest expense and the principal payment are shown on the income statement.
Which is better?

As usual, it depends. If you are leasing a high-technology piece of equipment, you will probably have an operating lease. If you are leasing a piece of machinery which you intend to use for a long time, you probably have a capital lease. Each type of lease is applicable to different leasing situations.

Call us at 204.478.7266 x110 if you would like us to help you write a business plan.    
 
About Us...

 

Beal Business Growth Consultants, Inc. helps owners of small and medium-sized businesses to buy, sell, value, and grow their businesses.  We also work with individuals who are looking to buy or start a business or franchise.

 

Call us at (204) 478-7266 x110 to book a free, initial 30-minute consultation to explore how we can help you buy, sell, value or improve your business.

 

Legal

Copyright 2016 by Steven Beal, Beal Business Growth Consultants, Inc.  The information herein is not complete and is intended only to provide guidelines to supplement counsel the reader receives from a qualified professional.  It is distributed with the understanding that the author is not rendering legal, accounting or tax advice or opinions on specific facts or matters, and accordingly, assumes no liability in connection with its use.

 

 

Published by Beal Business Growth Consultants, Inc.   

 

www.bealconsultants.ca