View Full Version : Buying a business (Advice is needed)
Archatype
29th January 2009, 15:32
Am preparing to buy a business and today they showed to me the monthly turnovers that it generates and something isn't right. They sell the lease of the business for 30k but looking at the revenue i cant help but think that something is fishy. The monthly profit is around £3.5k NET and yet they only sell the business for 30k? isn't this too little?
Also am told that there is very little to nothing tax you pay for your income when you are self employed and own a business other than the VAT which you add to everything which isn't really a tax you pay. Is that right?
I'll be talking to an accountant soon just wanna see what you peeps here think.
Surely you would expect more than 30k buy out if you make 3.5k per month?
MyAccountantOnline
29th January 2009, 15:51
One things for sure you rarely get something for nothing in business and if you are suspicious be very careful. You are absolutely right to seek proper paid for professional advice - a good accountant will help you with this one.
As for paying very little tax if your self employed! A good accountant can save you tax BUT if you are making money you will be paying tax. Generally people that boast they pay no tax make no money!
Archatype
29th January 2009, 16:09
One things for sure you rarely get something for nothing in business and if you are suspicious be very careful. You are absolutely right to seek proper paid for professional advice - a good accountant will help you with this one.
As for paying very little tax if your self employed! A good accountant can save you tax BUT if you are making money you will be paying tax. Generally people that boast they pay no tax make no money!
I'll be talking soon to the accountant of the said business so that to find out exactly what's going on.
What is the tax in the UK for business? there is no tax on how much you earn? Any website i can enlight myself with?
FE
29th January 2009, 16:14
I'll be talking soon to the accountant of the said business so that to find out exactly what's going on.
What is the tax in the UK for business? there is no tax on how much you earn? Any website i can enlight myself with?
Seek your own independant accountancy advise but there s corporation tax on profit from the business
Archatype
29th January 2009, 16:19
Seek your own independant accountancy advise but there s corporation tax on profit from the business
Do I need the books of the business in order to show them to my own accountant? What are the things I need to be careful of? can someone enlight me a bit because its my first time that ill be buying a business.
deniser
29th January 2009, 16:22
Surely you would expect more than 30k buy out if you make 3.5k per month?
If the busines requires some skill to run it then you expect to pay roughly 1 x the yearly net profit - more if anyone can run it.
But times are hard and people may be willing to take less.
Also watch out for future costs increasing - if for example the rent was last reviewed 5 years ago and a rent review is due, then the rent may well double as rents have only gone down to about the prices they were at 3 years ago. A double figure for rent and an increase in business rates may well eat a long way into your net profits.
Watch out also for staff costs and what the previous owner was paying himself. There is a big difference in whether the previous owner did all the work himself or whether the business was entirely staff run.
MyAccountantOnline
30th January 2009, 11:10
I'll be talking soon to the accountant of the said business so that to find out exactly what's going on.
What is the tax in the UK for business? there is no tax on how much you earn? Any website i can enlight myself with?
This might help - http://www.hjcca.co.uk/resources/tax_zone/tax_rates_and_allowances/index.php
MyAccountantOnline
30th January 2009, 11:11
Do I need the books of the business in order to show them to my own accountant? What are the things I need to be careful of? can someone enlight me a bit because its my first time that ill be buying a business.
Your accountant will discuss all of this with you - just take in as much information as you have so far on the business you are thinking of buying.