Unless you are a new reader to this publication, you will recall that I have commented that the market for business acquisitions has become more active.   A recent article in the October 24, 2013 edition of the Wall Street Journal addresses that topic. You can read it at "Finally A Good Time To Sell A Business."  Although the market is better, it is still a competitive environment and businesses that are better positioned are commanding better prices.

               

Most privately held businesses, including Sub S Corporations and LLCs, have calendar year ends for tax reporting purposes. As we approach the end of the year, it is important to consider year end tax planning strategies. This is particularly important if you are considering the sale of your business within the next three years. Although most of us dislike paying taxes, business acquirers and lenders look at tax returns to verify profitability and the ability to service debt. Generally speaking, the most recent two full years of financial performance will be the most significant drivers of business value. With that in mind, if you have not already done so, we would suggest that you schedule a discussion with your tax advisor to address year end tax planning.

 

There is an old saying that "Timing is everything," and that can be particularly true at the end of the year. The complexity of tax related decisions can be compounded if you are considering the sale of your business in the near future. For example: You may be considering the acquisition of some equipment. Do you purchase it before year end? Is it better for you to buy or lease? Although we can provide some general guidance to you, as we don't know the details of your specific situation, we would suggest that a call or visit with your tax planner would be appropriate.

 

One of the best ways to increase the value and marketability of your business is to upgrade your financial statements. Although audited financial statements are best, the cost of the audit can be prohibitive for smaller businesses. Alternatively, reviewed statements, or even compiled statements with footnotes, can add value. Most accountants get busy at the end of the year and the beginning of the new year, and the upgraded financial statements may require some additional work, such as reviewing year end inventory procedures. Because of this, we would suggest getting on your accountant's schedule sooner, rather than later.

  

The majority of our business is derived from referrals.  Please consider referring our services if you encounter a situation involving the potential purchase or sale of a business.  

 

Sincerely,

 

                        

  

 

 

Ronald V. Chernak

President 

 Inspiring business relationships since 1982!