Accounting News and Notes

Atlanta/Duluth Georgia  CPA Provides Top Five Financial Tips to Success When Buying a New Business

When you get ready to buy a business it is a critical decision which you will want to approach with caution and due diligence to ensure that you are well informed in your purchase. A wrong decision will cost you great financial pain and emotional suffering whereas the right purchase will be a feather in your cap for many years to come. Below is a sample inquiry I that I might receive:

I just considering buying a new business and I am looking to investing alternatives that might be best to consider when evaluating my proposed purchase.

Below is my response:

Below you will find Top Five Financial Tips you will want to consider both in buying or selling a business.

• A Good Attorney. A good attorney is the best protection (along with following their advice of course) to help ensure that you evaluate, consider, and document all important/critical factors in making your decision. As the purchase itself is the culmination of your due diligence, you will want an attorney to draft the actual purchase agreement to ensure that all needed critical components of your decision are well documented and agreed to. Your acquisition agreement should also document to whom the total purchase price is to be allocated, as this will be important for both tax planning and to prepare your tax return at year-end.
• A Good CPA. Before you make any substantial investment in any new business venture I suggest you discuss it with a CPA who can help ensure that your due diligence allows you substantive enough information to make a wise and prudent decision. Though financing is an important part of the equation the most essential piece is to consider the nature, scope, size and anticipated results of your new business venture.
• Evaluating Past Income Tax Returns & Interim Financial. Due diligence on the company’s financial condition, I suggest that we get at least two years of financial statements and tax returns, a year to date financial statement for the year including the balance sheet and the profit and loss, a copy of all material leases that you plan to assume, a non-compete on the prior owners and any key employees, and a list of all fixed assets and their fair market value that you will be buying, a detailed list of all inventory at cost, a list of open receivables, and a list of open payables.
• Due Diligence Procedures. Determining what specific procedures were done to evaluate the integrity of the financial statements (i.e., consultations with their major vendors, customers, an evaluation of checks written being sure that all checks are valid business expenses and have been properly recorded, consultations with their banker, their prior CPA, an evaluation of their overall books and records and internal controls, and tracing several months detailed deposits to the bank statements along with reconciling the total bank deposits for the year to the financial). Also I would suggest getting copies of detailed payroll records for employees and independent contractors so that you are aware of the staffing needs/requirements and those monetary considerations. A good CPA can help evaluate these in detail looking at trends, the market, and other demographic data, and any undue/excessive concentration of business & clients, technology etc., to ensure you are fully aware of what you are buying.
•  Gain Independent Verification/An Appraisal. An acquisition that also includes the of buying real estate as part of the total purchase, you will want to determine fair market value by having an independent appraisal performed.

The above is a good list to get started and then to see where these answers/questions take you. Please note however, there is no substitute for the facts and intuitiveness that a good CPA/financial adviser can bring to the table to evaluate buying a business and its purchase/sales price.

Utilizing a payroll service will do much to make this administratively burdensome process more seamless than if you strive to go it on your own. To learn more visit http://www.hiscpa.com/payroll.html

Knowing what is a legal tax deduction and the documentation thereof is essential to sound business management. To see  how you can be ready http://www.hiscpa.com/business-expenses.html

Ensure that your workers are properly classified predominantly to ensure that there are no workers, who are truly employees, that you are in error classifying as employees, visit  http://www.hiscpa.com/independent-contratctor.html

Contact HIS CPA PC (A Christian Atlanta CPA Firm) today.

To learn more about addressing IRS Tax Issues and Back Tax Returns visit http://www.hiscpa.com/working-with-the-irs.html  

John Dillard is an Christian Speaker/Author and an Atlanta CPA. To See how he takes Christ along with him to work visit http://www.hiscpa.com/ and for his latest book Overcoming Life’s 9/11’s: Job’s Journey and a Voice of One: Nehemiah’s Prayer visit http://www.john-dillard.com/ or call John Dillard CPA today at 770.814.9304 (All Rights Reserved) Dare to Attempt Something so Great for the Kingdom of God that it is doomed to failure, lest Christ be in it!    

We advise clients on: IRS representation, Offer in Compromise, Tax Problems, Incorporation in Georgia, Corporate and Personal Income Tax Returns, Part-time CFO, Virtual Controller, Business Planning, Offer in Compromise, Back Taxes, Bookkeeping.

Serving Atlanta, Duluth, Gwinnett, Barrow, Bartow, Carroll, Cherokee, Clayton, Coweta,  Douglas, Fayette, Forsyth, Fulton, Gwinnett, Henry, Newton, Paulding, Pickens, Rockdale, Walton, Barrow, Bartow, Carroll, Henry, Newton, Bartow, Walton, Rockdale, Barrow, Spalding, Coweta, Dawson, Douglas, Fayette, Newton, Paulding, Spalding, Walton, Henry, Paulding, Douglas, Coweta, Canton, Covington, Douglasville, Druid Hills, East Point, Forest Park, Griffin, Lithonia, Mableton, McDonough, Milton, Mountain Park, Newnan, Powder Springs, Stockbridge, Union City, Villa Rica, Winder, Woodstock,  Smyrna, Sandy Springs, Marietta, East Point, Gainesville, Snellville, Buckhead, Buford, Peachtree City, Dunwoody, Kennesaw, Decatur, Conyers, Stone Mountain, North Fulton County, DeKalb County, Hall County, Clayton County, Cobb County, Forsyth County, Hart County, Jefferson County, Duluth, Atlanta, Alpharetta, Johns Creek, Lawrenceville, Milton, Norcross, Snellville, Roswell, Buford, Cumming, Grayson, Lake Hartwell, Suwanee, Sugar Hill, Loganville, Lilburn, Dunwoody, Gainesville, Decatur, Atlanta GA, Gwinnett County, North Fulton County, Cherokee County, DeKalb County, Hall County, Clayton County, Cobb County, Forsyth County, Hart County, Jefferson County, Duluth, Atlanta, Alpharetta, Johns Creek, Lawrenceville, Marietta, Milton, Norcross, Snellville, Roswell, Buford, Smyrna, Marietta, Cumming, Grayson, Hartwell, Suwanee, Sugar Hill, Loganville, Lilburn, East Point, Gainesville, Snellville, Buckhead, Buford, Peachtree City, Dunwoody, Kennesaw, Decatur, Conyers, Stone Mountain, Decatur. Sandy Springs, Peachtree City, Douglasville, Newnan, Griffin, Woodstock, Carrollton, Forest Park, Canton, College Park, Cartersville, McDonough, Riverdale, Fayetteville, Covington, Stockbridge, Conyers, Clarkston, Barrow, Bartow, Butts, Carroll, Cherokee, Clayton, Coweta, Dawson, and Douglas.

Gwinnett CPA Teaches Utilization of Promissory Notes to Protect Your Georgia Based Business

Recently I received the below inquiry seeking advice on setting up a Promissory Note:

Is there a “normal or required” period that a Loan To Shareholder needs to be repaid?

The below is my response:

The “normal amount” would be what a bank would routinely do as a practical matter of doing business. With all loans you will want to ensure that you have a promissory note signed by all parties confirming the terms and conditions. Frequently businesses and individuals alike may extend, grant or receive credit in the furtherance of their business and personal interests.  A basic understanding of promissory notes and their use and application are critical to protecting company assets, cash flow issues, as well as profit maximization.  These initial parameters of review prior to signing a promissory note will be essential to their final agreement.  These issues will be key to helping ensure the business deal you get is actually the one intended. To read more about Promissory Notes visit http://www.hiscpa.com/promissory-notes.html

Also you can see what a Sample Promissory Note might look like:

SAMPLE PROMISSORY NOTE

FOR VALUE RECEIVED, [borrower] promises to pay to the order of [lender] the principal sum of [loan amount] in legal tender of the United States, with interest thereon from [loan date] at the rate of seven (7%) percent per annum, on the unpaid balance until paid.  Principal and interest shall be payable at the office of the note holder, [office location], or at such other place as the holder hereof may designate in writing according to the following terms:

1. The payments will be [monthly payment amount] and due on the first day of each month beginning [date] and ending on the first day of [month and year].
2. A current Financial Statement will be submitted by [date]
3. The following assets will be assessed as collateral until the entire debt is retired:

   [list of assets]

Should any installment not be paid when due, or should the maker fail to comply with any of the terms or requirements, the entire unpaid principal sum evidenced by this Note, with all accrued interest, shall, at the option of the holder, and without notice to the undersigned, become due and may be collected forthwith or any and all collateral sold by most expedient means, time being of essence of this contract.  It is further agreed that failure of the holder to exercise this right of accelerating the maturity of the debt, or indulgence granted from time to time, shall in no event be considered as a waiver of such right of acceleration or stop the holder from exercising such right.

Installments not paid when due shall bear interest at the rate of seven (7%) percent, per month, from maturity.  Should this Note, or any part of the indebtedness, evidenced hereby, be collected by law or through an Attorney at Law, the holder shall be entitled to collect Attorneys’ fees in an amount equal to fifteen (15%) percent of the principal and interests, and all costs of collection.

Undersigned guarantor, endorser or other party, waives demand, protest, notice of demand, protests and non-payment.

Privilege is reserved by the maker of this note to pay all or any part of this indebtedness prior to maturity without penalty.

Signed: [signature of borrower]
Company: [company name]
Title: [title of signatory]
Date: [date signed]

Professional Advice 

Never go it alone.  Your CPA is a critical part of the loan procurement process, as his wisdom, knowledge, and insight will help guide you to the best loan.  Frequently a little tweaking or good negotiation skills will save tens of thousands of dollars resulting in an improved bottom line and a smoother cash flow for your business. All promissory notes should be drafted in light of the business deal, current economic conditions, credit collateral, negotiation, etc. Utilizing a business attorney to draft a Promissory Note specific to your unique circumstances and needs is essential to having your wishes, needs and desires capable of being fully addressed and enforced. 

John Dillard is an Christian Speaker/Author and Certified Public Accountant in Duluth, GA. To See how he takes Christ along with him to work visit http://www.hiscpa.com/ and for his latest book Overcoming Life’s 9/11’s: Job’s Journey and a Voice of One: Nehemiah’s Prayer visit http://www.john-dillard.com/ or call John Dillard CPA today at 770.814.9304 (All Rights Reserved) Dare to Attempt Something so Great for the Kingdom of God that it is doomed to failure, lest Christ be in it!  

Contact HIS CPA PC (A Christian CPA Firm) today.

We advise clients on: IRS representation, Offer in Compromise, Tax Problems, Incorporation in Georgia, Corporate and Personal Income Tax Returns, Part-time CFO, Virtual Controller, Business Planning, Offer in Compromise, Back Taxes, Bookkeeping.

Maximizing Value When Selling Your Entrepreneurial Business 

Atlanta Bookkeeping & Accounting Services

Once an owner has decided it is time to make a change in the company’s ownership, the owner usually seeks advice from financial advisors.  The owner reviews the tax returns and financial statements for the past few years.  Owners’ thought processes lead them to set a bottom line price before seeking a valuation.  After a valuation is performed by a qualified professional, the owner typically is in “shock”.  The company documents do not support the owner’s value.  Typically a company’s value maybe understated based on the documentation.  Many investor owned, privately held companies manage through emotional decisions rather than by the numbers.  Owners should rely on the advice of professionals and fully document their company’s operations before they decide to sell. 

Reposition the Documentation. 

1.         Maximize the EBITDA by applying financial ratios.  Go beyond the usual cost cutting and receivables management.  Understand how management of the financial ratios may change the bottom line.

 2.    Fully document the use of add backs. Include all add backs to maximize the value of the company. 

Reposition the Operations. 

1.    Reposition the operations so that 80% of the annual revenue is contractual, reoccurring revenue.

2.    Eighty percent (80%) of the customer base should generate a majority of the company’s revenue.  A company is less valuable when a majority of the revenue is generated by 20% of the customers. 

3.    Create management depth.   Adding an operations manager, trained to handle the day to day operations, identifies management strength to a prospective buyer and spreads the perception of customer loyalty to the company, beyond the owner. 

4.    Determine the risk factors associated with the owner’s ability to grow the company.  The owner can increase the value of the company through the development of a plan to reduce and eliminate risk factors.  Reposition the company’s weaknesses as opportunities by altering management strategies.  

5.    Prove the value of a company through acceptable documentation and turn a buyer’s skepticism into confidence.

To discover more about positioning your business for sale you can contact Terry Robinson, Broker of the tfr Group, Inc. at 770 262 6491or by e-mail at tfrobinson.net

Exiting Your Business: Is it about the Economy? 

You had a well-defined plan for exiting your business.  You knew how, you knew when, and you knew for how much.  But, if you’re like most business owners, you might be wondering how changes in the economy and the business environment might affect the timing of your plans to retire or otherwise exit your business. 

How the economy factors in. Buy low, sell high.  Every owner wants to sell all or part of their business at the top of the market.  And certainly, the market for businesses is cyclical, with its health aided by a growing economy, affordable capital for acquisition financing, and optimism and competition among buyers.  With the slumping economy at the forefront of today’s news, business owners are now asking, “How will this environment affect the market for my business?”  A look at the past, going back 30 years and several business cycles, gives us an idea of what we can expect for business sales when the economy falters. 

It is no surprise that, in years of poor economic growth or decline, the number of mergers and acquisitions did in fact drop.  And true to form, M&A activity is likely to decline again as the economy softens.  But perhaps the more interesting message that history provides is that a new (higher) level of sustained M&A activity is noticeable in the past decade.  In fact, 1995 looks to be the line of demarcation, after which M&A activity expanded dramatically and remained relatively high (from a historical perspective), even in weak business environments.  Although there will be annual variances, elevated levels of M&A activity appear to be based on accepted business practices that are here to stay. 

Tax Rates. In addition to economic malaise, business owners are concerned with possible tax rate increases, specifically the capital gains rate.  A capital gains tax is charged on the profit realized on the sale of an asset, including a privately owned business.  The 2003 Tax Act reduced the maximum capital gains tax rate from 20% to 15% for long-term capital gains (investments owned for at least 12 months)[1], creating an exceptional tax-saving opportunity for business owners looking to sell, given that the rate had not been below 20% in the past 60 years[2].  The five-percentage point reduction was not a permanent change, however.  Originally set to expire in December 2008, President Bush extended the lower rate[3]. 

Although the lower rate is now not due to expire until 2010, the change in the White House may raise the issue sooner.  With an administration change in January 2009, the capital gains rate debate is expected to surface again.  Senator Obama had said he would raise the long-term capital gains rate to 25%-28% for families making more than $250,000; Senator McCain stated he wanted to keep the rate at its current 15% level[4], but admitted a Democrat-controlled congress could force a rate hike.  Either scenario makes today’s capital gains tax rate probably the lowest we’ll see for decades to come.  

Personal Factors Take Priority. The decision to sell a business is not primarily tax or economy driven.  While owners sometimes look to maximize value during an attractive M&A cycle or capitalize on a consolidation trend in their industry, most private business sales are motivated by personal factors.  These can include a wish to retire, advancing age, declining health, a desire to reduce the personal risk associated with a large concentration of wealth in one asset, or the realization that family members are not interested in taking over the business.  While external factors can certainly affect the outcome of a business sale (including the price and terms of the transaction), they usually are not the driving force.  

Regardless of your exit motivation, it is never too soon to start preparing for a transition.  In fact, savvy business owners begin to prepare for their transitions early – often years in advance of a transaction.  Some of the initiatives that owners undertake to get ready for a future transition include setting up family trusts that can help minimize estate and gift taxes on the eventual sale proceeds, compiling proper (preferably audited) financial records on the business, and preparing business plans and detailed documentation about how the business operates. 

Planning for a transition can seem overwhelming, but business owners are not expected to do it alone.  Tax, legal, investment banking, and financial planning experts can each play a critical role in preparing an owner for an eventual transaction.  Such experts can guide you through the planning process, and help identify and implement the most effective strategies to optimize value.  

You can reach Jeff Shoup of the Shoup Group at 404 842 2236.  

Morgan Stanley Smith Barney LLC and its affiliates do not provide tax or legal advice. To the extent that this material or any attachment concerns tax matters, it is not intended to be used and cannot be used by a taxpayer for the purpose of avoiding penalties that may be imposed by law.  Any such taxpayer should seek advice based on the taxpayer’s particular circumstances from an independent tax advisor.   © 2009 Morgan Stanley Smith Barney LLC.  Member SIPC.

Tax Filing for Business Sales and Acquisitions

Filing of IRS Tax Form 8594: Asset Acquisition Statement

When buying or selling a business one of the most frequently neglected tax forms is IRS Tax Form 8594: Asset Acquisition Statement. Generally both the purchaser and the seller must complete Form 8594 and attach it to their income tax returns (Form 1040, 1041,1065,1120,1120S etc) when there is a sale or transfer of a group of assets that make up or comprise a trade or business. The purchase price or basis in such assets is solely determined by the amount paid or the assets (i.e., the purchase price). The form is required, whether the group of assets constitutes a trade or business in the hands of the purchaser, the seller or both.

Form 8594 is attached to a taxpayers (individual, corporate, partnership) and applies to a LLC, LLP, C Corporation, S Corporation, Trust, Partnership or Proprietorship. Form 8594 should be included in the tax year and as part of the tax return to which the sale or purchase occurred. For purposes of determining if Form 8594 is required you would look to see if the group of assets that make up a trade or business has any going concern value or if goodwill would be attached to such assets.

Form 8594/Asset Acquisition Statement is addressed under IRS tax code Section 1060. The form requires both the seller or the purchaser to complete the form listing the other parties full address and Federal Identification Number/EIN. The form also requires that the total purchase price be allocated between six different classes of assets. These classes over, for example, cash, inventory, fixed assets and intangibles. For the purchaser this allocation is critical to ensure that all items purchased are correctly identified and treated correctly. For example in President Clintons first tax act he passed while President required intangibles, which are commonly referred to as going concern value or goodwill, to be amortized over fifteen years (these items are reflected on Section VI of Form 8594.

John Dillard is a Christian Speaker/Author and Certified Public Accountant (All Rights Reserved). To See how he takes Christ along with him to work visit http://www.hiscpa.com/ (An Atlanta  CPA firm) and for his latest book Overcoming Life’s 9/11’s: Job’s Journey and to learn about his ministry visit http://www.john-dillard.com/ To contact John Dillard CPA (Atlanta Christian Author/Speaker) today call 770. 814.9304 proudly serving Duluth, GA, Gwinnett County and Beyond.

“Dare to Attempt Something so Great for the Kingdom of God that it is doomed to failure, lest Christ be in it!”

What, then, shall we say in response to this? If God is for us, who can be against us? Romans 8:31

Why are these verses here? Learn how HIS CPA became a Christian Accounting firm visit http://www.hiscpa.com/christian-CPA.html

We advise clients on: IRS representation, Offer in Compromise, Tax Problems, Incorporation in Georgia, Corporate and Personal Income Tax Returns, Part-time CFO, Virtual Controller, Business Planning, Offer in Compromise, Back Taxes, Business Acquisition/Sales, Forensic Accounting, Business Valuations and Bookkeeping.

Atlanta CPA on Valuing Your Atlanta Business

Atlanta Business Valuations: How to Prepare and Understand a Business Valuation

Whenever you are contemplating buying or selling a business, presently own your company, or in the midst of estate planning, the value of a business is a critical component in all planning, acquisitions, or marketing your business. The most essential component of preparing or understanding a business valuation is a requisite knowledge of how to prepare and review Financial Statements. By first understanding these you are now well poised to begin to detect and review the nuances of a company’s operations, which then will provide insight so that you might be able to best Manage the Heart Beat of your Business.

A learned analysis of  the basics of the information a Balance Sheet and Profit and Loss are prepared and the information to be gleaned, we are well armed to understand and apply many factual pieces of information that are available when properly analyzed. Though the best indication of a business’s value is what a willing buyer desires to pay and a seller is willing to accept, these insights will help guide you to many techniques and variables which will give you insight into what a business’s true value might be. An on-going business with the value of its cash flow, goodwill, and customer lists will be generally worth far more than a business that is liquidating. The below variables and analysis are directed to a business for which is presently in business and plans to remain so.

Net Income Before Taxes

The first place one typically looks to see the value of a business is its net income. Absent a positive net income or other substantive mitigating factors, the absence of a positive net income will dramatically lessen both the cash flow of a business and accordingly its overall value. In looking at a business income there are several variables that are most often considered and it’s typically different from industry to industry with businesses in different market segments being valued dramatically different than that from others. Frequently net income is evaluated under both a multiplier of net income or a rate of return comparison, of which one evaluates the amount of investment to buy a business relative to its cash flow.

Compensation/Benefits for Owners and Key Personnel

What an owner takes out in salary as far as his overall compensation/W-2, distributions, and benefits typically is also included along with net income as being part of the discretionary income included in consideration. Typically these are counted similar to a company’s net income amount when calculating a business’s overall net worth and multiplied or included along with the rate of return considerations.

Interest Expense & Other Non-Cash Charges

Non-cash charges such as depreciation and amortization are also added back to the net income amounts when evaluating a business value. As these items are legitimate financial and tax deductions of the business, they do not negatively affect the cash flow of the business so these monies are added back to the net income totals/rate of return analysis accordingly.

Desired Rate of Return & ROI (Return on Investment)

Not only are rates of return important with making an investment in a mutual fund or other investment, they are also a critical component of measuring a company’s overall value when looking at making or maintaining an investment. One should always be cognizant of the rate of return of a business and the other financial opportunities available at any given time as one would be prudent to always best invest where ones money may be multiplied.

Typically in a growing profitable business a business owner’s rate of return is best served by investing in one’s own business as often a few dollars may be turned over many times in a year making an additional rate of return on each completed sales cycle. As with all things in life, however, a business owner should not ignore other Risk Management/Retirement issues so as to keep all of their goals in continual mind leading to a balanced debt load between business and personal issues.

Sales Revenue Growth & Expectations

Several industries utilize as their base model a multiplier of sales as a business valuation method. This is perhaps most often used when the overall profitability of a particular industry is more constant than not. Although due diligence should be properly applied in evaluation past, present, and anticipated sales; focusing on this model alone would not result in the fairest evaluation of a business’s worth because of net income, salary, benefits, and a review of the other assets of the business.

Technical Ability/Training Level of Staff

A business that has a well-trained and competent staff is worth much more than one who does not. Care should be given to carefully evaluate and review credentials of both critical and support staff as it takes a team effort to make a business successful. Evaluating and reviewing resumes, personnel records, accreditation’s, and degrees are all meaningful steps in this process. Special care should be given as to whether a particular business will need a hands own manager or if the present staff are capable of the autonomous running of the business.

State of the Economy/Understanding Market Dynamics and Their Business Impact

Though there are no guarantees regardless of how good an economy is as businesses fail in both an up and down economy. A business with a good product, being in the right niche, having the right people, and in the correct location has a much better chance of success than one who does not satisfy these critical business components. However any good business valuation would be foolhardy should it fail to appropriately take in the national and worldwide economy as with world shrinks as technology expands.

No longer are cities, counties, towns, states, and even countries isolated as the impact of a global economy impacts all. Rising gas prices for example have immediate impact on consumer discretionary and perhaps a much longer effect as the rising cost of fuel/oil impacts the transportation and production cost causing a ripple effect throughout the entire economy. Additional and heightened scrutiny should be done at the local of a business studying the changing demographics of a business immediate climate. Discovering the age, income, population, its spending patterns, traffic flow, zoning, political environment are all critical components of valuing as well as opening any business.

Lease Agreements & Fixed Asset Review/Analysis

A detailed evaluation of a company’s fixed assets/lease agreements should be done by item to ensure that fixed assets and leased equipment are in good working condition and are fit for their intended purpose. An evaluation should also be done to review as to whether fixed assets will have to be replaced, when, and their approximate replacement value. Leases, both for rented space and equipment, should be carefully reviewed to ensure that one understands all of the variables of a business and their impending impact on a business’s value.

Intellectual Property and Non-Compete Agreements

Having all the best equipment, the latest technology, a well-trained and efficient staff, and in a good economy are all indicators that positively impact the overall value of a business. However, just as a business is able to place locks on its doors and incentives to its employees, a business also needs to do what it can to protect its business interests. A business invests thousands of dollars and often years in the specialized techniques and skill set critical to a business operation and its success. Accordingly it is wise to consider having key staff sign a non-compete agreement restricting their ability to steal your clients and employees.

Due care and consideration is of the utmost at this time to ensure that you have a well drafted agreement which will be legally enforceable as many states, Georgia included, will not enforce any of a non-compete if it is deemed to be too broad or restrictive in scope. As such you will want to be sure to retain the services of an attorney who is familiar with these statutes and particularly those of the states in which you business operates/the agreement would be enforced.

Also a business with intellectual property such as patents, copyrights, and other specialized procedures will want to be sure to both formally and legally protect their interests. Often this process might also result in an individual/company being asked to sign a non-disclosure agreement to protect the ideas and processes of a company.

By skill and wisdom to business techniques, processes, and overall business strategy we are well placed to help you make what may well be the largest financial decision you will ever reach.

John Dillard is a Christian Speaker/Author and Certified Public Accountant (All Rights Reserved). To See how he takes Christ along with him to work visit http://www.hiscpa.com/ (An Atlanta  CPA firm) and for his latest book Overcoming Life’s 9/11’s: Job’s Journey and to learn about his ministry visit http://www.john-dillard.com/ To contact John Dillard CPA (Atlanta Christian Author/Speaker) today call 770. 814.9304 proudly serving Duluth, GA, Gwinnett County and Beyond.

“Dare to Attempt Something so Great for the Kingdom of God that it is doomed to failure, lest Christ be in it!”

What, then, shall we say in response to this? If God is for us, who can be against us? Romans 8:31

Why are these verses here? Learn how HIS CPA became a Christian Accounting firm visit http://www.hiscpa.com/christian-CPA.html

We advise clients on: IRS representation, Offer in Compromise, Tax Problems, Incorporation in Georgia, Corporate and Personal Income Tax Returns, Part-time CFO, Virtual Controller, Business Planning, Offer in Compromise, Back Taxes, Business Acquisition/Sales, Forensic Accounting, Business Valuations and Bookkeeping.

Atlanta CPA on Buying or Selling a Metro Atlanta Business

Your initial investment and set up might be the most important financial decision you ever reach for the new business owner. Knowing what is important, how to review a business from the outside in and its valuation are all critical components of the process.

Reviewing these articles and research will do much to help you along the way as you consider the buying of a new business or the selling of your present one.

Mergers and Acquisitions

Factors to Consider When Valuing a Business
Although each and every business is different learning basic valuation techniques will put you well ahead of others when evaluating either the value of your own business or a potential purchase.

http://www.hiscpa.com/business-valuations.html

Due Diligence when Buying a Business
Digging beyond the financials will enable you to see beyond what the numbers alone can tell. Studying manpower required, dependence levels on different products/customers, reviewing contracts and leases, and protecting intellectual property are all critical components of any wise evaluation process.

http://www.hiscpa.com/accounting-checklist.html

Business Plans

Writing a Business Plan
Writing a Business Plan is your first best step to help your new business survive. A business plan is an invaluable tool that you will want to refer to often to ensure you business stays on track and maintains and achieves all of its operating goals.

http://www.hiscpa.com/business_plans.htm

Resume

Resume of John Dillard, CPA, Accountant
Read in detail the depth of the past experiences, accomplishments, and achievements of a CPA who takes Christ along with him each day to work. Studying tax law and by utilizing wise discernment are hallmarks of his past and future work.

http://www.hiscpa.com/resume.html

John Dillard is a Christian Speaker/Author and Certified Public Accountant (All Rights Reserved). To See how he takes Christ along with him to work visit http://www.hiscpa.com/ (An Atlanta  CPA firm) and for his latest book Overcoming Life’s 9/11’s: Job’s Journey and to learn about his ministry visit http://www.john-dillard.com/ To contact John Dillard CPA (Atlanta Christian Author/Speaker) today call 770. 814.9304.

“Dare to Attempt Something so Great for the Kingdom of God that it is doomed to failure, lest Christ be in it!”

What, then, shall we say in response to this? If God is for us, who can be against us? Romans 8:31

Why are these verses here? Learn how HIS CPA became a Christian Accounting firm visit http://www.hiscpa.com/christian-CPA.html

We advise clients on: IRS representation, Offer in Compromise, Tax Problems, Incorporation in Georgia, Corporate and Personal Income Tax Returns, Part-time CFO, Virtual Controller, Business Planning, Offer in Compromise, Back Taxes, Bookkeeping.

Atlanta CPA Business Selling Tips

We are hearing it daily:  We are in tough economic times.  Gas prices are rising faster than our Atlanta summer temperatures, the housing market slowdown is affecting many ancillary industries, and recession is on the horizon or even here.  The business owners I talk to are asking how this affects the potential sale of their business, and what they should do about it. Some of the questions, all interrelated, are:

 Are there buyers out there?

There might be more buyers now than in good economic times.  As corporations downsize, laid off workers and managers look to escape the corporate world by owning their own business.    There are also industry or strategic buyers seeking opportunity by buying distressed companies. 

Will I get the price I want?

That depends.  Value is influenced less by the industry than by your specific operation.  It is influenced less by the national economy than by the state economy, which is less important than the local economy.  If you have a good operation even in a challenged industry, you will get a good price.  However, if your Financial Statements have been hurt by the current economy, you must analyze and decide if it is worth hanging in there for a turnaround which may be years away.  Determine a current market price based on trailing twelve months of performance versus the valuation on your projections for the future.  Is the difference enough to warrant waiting?  

 How long will it take to sell?

If you are in one of the distressed industries, and aren’t willing to accept a lowball offer, it may take longer to find a buyer who has the confidence to make a move. If you have an attractive business regardless of industry, you will find a buyer

What can I do to make my business more attractive to buyers?

·         Clean up the financial statements. Make sure you have 3 to 5 years of clean and accurate financial statements available.  If not clean and accurate, it will be discovered in the Due Diligence phase costing you much time and credibility.  In addition to your Income Tax Returns, have Income Statements (P & L) as well as Balance Sheets available.   Be able to identify the additional financial benefits to the owner hidden in these reports. ·         Physically improve the looks of facilities. Put new paint on the walls, decorate the public areas, make sure the equipment is clean and running well, and tidy up the office space.  If it appears you care about and attend to the details of the physical plant, buyers will believe you approach all aspects of your business with the same concern.  ·         Pay down debt, if you can.  Not only will it make your Balance Sheet more favorable, your Income Statement will improve by reducing the debt service.  For those industries where selling price is a multiple of Net Income, you will increase the sale price of your business proportionately.  ·         Document your business processes. Even if you may be planning to stay on after the sale for a transition period, potential buyers will be more comfortable if a business manual details exactly how your business is run. Take the time to document all the steps involved in your business cycle, including design, ordering, manufacturing, shipping, sales, disposal, billing, customer service, etc.·         Reduce the “you” in your business.  If you are your business, then your business is worth less without you.  If potential buyers believe that most of the business procured is based solely on your relationship with customers, they will anticipate losing business and discount their purchase offer accordingly.  Make the marketing and operational changes necessary to ensure your business can and does run without you.  ·         Prepare a business or marketing plan. Buyers will want to know what you are doing to maintain and grow your business.  Document your marketing strategies and identify your major customers.  Buyers are not, or at least should not be, satisfied with maintaining what you have built.  They want to grow your business.  Help them by pulling together information on industry and customer trends, and indicate how you would grow the business if you had the time, energy, and resources.   

As you may have realized, instituting all these steps are good moves to make even if you weren’t planning to sell.  But having made these adjustments, once you make the selling decision, you can move forward quickly.   And finally,

·         Gather pertinent business information. Buyers will want to know about such things as the number, skills and experience of your staff, the size and value of your facility, and the type of equipment and the amount of available inventory

·         Obtain an accurate and up-to-date valuation of the business.  To avoid selling your business at less than market value–or, conversely, pricing yourself out of market—obtain an accurate valuation of the business that is prepared by a professional who is familiar with the market place and valuation methodology. 

In my experience, there are always willing and able buyers for attractive, well run, and forward thinking businesses despite current economic conditions.  Making your business one of those is the secret to a profitable and quick sale. For more information, you can contact Hal Rogness of Walden Businesses, Inc. at 678-277-9951.