It is important to protect yourself from forfeiting your deposit when you sign a purchase contract. This would seem to be a very obvious statement. Except, what is not obvious is that so few people know how to do that. The result of inexperience is that too many people lose their purchase deposit. The deposit checks vary from $5,000 to $50,000 or even more. Read more
Whenever you make an offer for a business and put down a deposit you are putting yourself at risk that it could be forfeited to the broker and/or seller. Here are a few things you can do to make sure that does not happen:
Business purchase deposit protection
- Write LOI (Letter of Intent). This is not a binding document, and no deposit is necessary. Then after you have agreed with the seller on the price and major terms, a formal offer can be written. At this point you can afford to pay to have the purchase contract reviewed by your attorney, or due diligence CPA, before being signed. Read more
Going Green helps the earth and saves you money.
So how do we do that? This is a very interesting subject. The “Green Environmentalists” are designing and building low energy use buildings. They are also recycling water and reducing energy use.
Congress passed a law subsidizing solar generated electricity.
You can also buy electricity from independent utility companies who are selling electricity at a discount. Let us not forget solar water heaters.
Pet Business Due Diligence
“Bill” and his family were looking for a dog kennel and went on to the internet and started looking at various “Businesses for Sale” web sites. He located a dog kennel for sale with real estate in another state. Bill and his family had experience with boarding animals so it seemed the perfect business. Read more
Getting the True Value of a Business.
In the business broker community there is a review process that helps a buyer determine if a business purchase makes sense or not. This check can be done by a Fortune 500 company where everything is figured down to the penny and takes 1000 hours of research or it can be done by a small main street shop buyer who figures it out in one hour. Each item in this review process requires a decision. Read more
The underground economy is the illegal way to avoid paying payroll taxes and workers compensation insurance.
Of course when and if you get caught, the penalties are quite high. If you do the bulk of your work yourself and only hire low paid staff that has low payroll expenses, you can compete with the underground economy.
The seller told the buyer “The books do not show all the money, but I guarantee you that this business will clear $10,000 a month after taxes.”
How often have you heard these words? Wouldn’t it be great if you could actually get a guarantee from a seller when buying a business? You can. But you have to ask for it, and you have to give the seller a good reason for them to give it to you. Read more
Buying a Smog Shop in California
There are millions of cars that need a smog check every year in California. So buying a smog shop can be a good investment, or it can be a bad choice. How can you tell if it is a good idea?
The State of California allows smog centers to either test the car’s emissions or to repair the car to meet the requirements. The Department of Consumer Affairs/Bureau of Automotive Repair directs vehicles that are more likely to fail, called high emitter profile, to a Test Only Center.
What is High Emitter Profile? Read more
Upfront Appraisal or Valuation Fees by Business Brokers
I live in California, where upfront fees are illegal. The way brokers can get around this in California is to charge for an appraisal and be paid for it. After the appraisal is completed, the broker can ask for and receive a listing. If the listing is given before the appraisal is done and paid for it is illegal. Or done as a condition of the listing it is considered an upfront fee and again is illegal.
As a CPA, I have found that most business books are not in a marketable form. I would therefor charge an accounting fee for putting the books in proper form. I might also charge for a CPA business evaluation. This would be usable for any business purpose in addition to selling a business.
If you have gotten tired of looking at the same old main street businesses, I would like you to know you are not alone.
You should be prepared to look for up to two years to find the right fit. Read more
Willard Michlin, CPA, CBB, CFE
California Licensed Real Estate Broker #00529559
Certified Public Accountant (CPA) # 106752
Certified Fraud Examiner (CFE) #594927
Professional Certified Business Broker (CBB) designation
For Business Due Diligence and Consulting Services
Business Buying Services
PO Box 2734, Seal Beach, CA 90740-2734