Business Set Up and Purchase

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Beginning in Business series: Business Set Up and Purchase. Accompanying PDF is Paper 01.03

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Business Set Up and Purchase

  1. 1. Business Set Up And Purchase Alan Lewis Accountants www.lewistaxation.com.au
  2. 2.  Determine salary and profit expectations for: your time your investment your expertise  Be realistic in your expectations  Survey the market www.lewistaxation.com.au
  3. 3.  Obtain work in that type of business  Lifestyle?  Match skills, knowledge and experience  List assets that you will require  Are there any businesses for sale? www.lewistaxation.com.au
  4. 4.  Type of entity  Documentation required  Explanation of entity’s operation www.lewistaxation.com.au
  5. 5.  Feasibility Study: Sales Overhead expenses Wages Set up costs Budget Break even levels Sensitivity Analysis Cashflow Forecasts Pay As You Go (PAYG) tax payable Business Benchmarks Comparison www.lewistaxation.com.au
  6. 6.  Statement of Net Worth  Projected Balance Sheet  Ongoing role of accounting firms  Competent Commercial Solicitor  Bank interested in small business www.lewistaxation.com.au
  7. 7.  Financial accounts last 5 years  Tax returns last 5 years  Debtors’ Aged Analysis www.lewistaxation.com.au
  8. 8.  Access to: Cash Payments Book Cash Receipts Book Creditors’ Aged Tax Invoice Books Analysis Journals Creditors’ Invoices Bank Deposit Books Stock records Bank Statements Work in progress records Ledgers Wages records Order Book Lease Agreements www.lewistaxation.com.au
  9. 9.  Is the Vendor running a similar business?  Check purchases, sales and wages  Restraint of Trade  Will customers remain?  Review stock  History of the business  Market share  Competitors  Suppliers www.lewistaxation.com.au
  10. 10.  Suppliers’ Terms of Trade  Terms of Trade with Debtors – are they enforced?  Are Tax Invoices and Statements prepared promptly?  Check plant and equipment  Is the plant owned, leased or on hire purchase?  Leased premises – get a copy of the Lease Agreement  Landlord’s approval for transfer of Lease www.lewistaxation.com.au
  11. 11.  Check the Lease – what would your obligations be for: removal of equipment at the end of the Lease? rectification of premises? option periods? exercise of options? painting? repairs and maintenance? re-fit requirements? www.lewistaxation.com.au
  12. 12.  Acquiring the building? – Check  Title Deed details  Zoning  Apportionment of price  If taking over Debtors – BEWARE!  What employees are you retaining?  Holiday, Sick and Redundancy Pay  Long Service Leave www.lewistaxation.com.au
  13. 13.  Customer List  Vendor’s intention  Vendor assist in the changeover?  Valuing of stock  Politics  Gazetted hours  Wages for staff  What is the state of the economy? www.lewistaxation.com.au
  14. 14. 90  Monthly Sales Dissection 80  Review Debtors’ Ledger – 70 any large credit notes? 60  Credit Worthiness Report on the business 50 Men  Social behaviour changes 40 Women  Technology changes 30 Children  Town Planning 20 Regulations 10  Customers – who are 0 they? – demographics? 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr www.lewistaxation.com.au
  15. 15.  Review the operations  Creditors’ Aged of the business Analysis  Employee work  Check the bank specification reconciliations  Does the business have  Quality control the right product mix?  Any  Check suitable patents, trademarks, lic systems and enses, copyrights? policies for GST  Order Book  Check on stock  Partially completed buying patterns contracts – check! www.lewistaxation.com.au
  16. 16.  Remember, what you are looking for are clues that the business is not what it is being built up to be!  The buyer must beware – check, double check and cross check everything!  Once you sign the contract, it is very difficult to renegotiate . www.lewistaxation.com.au
  17. 17.  Business Name  Australian Taxation Office: Withholding Tax Public Officer (Company) Australian Business Number GST Registration www.lewistaxation.com.au
  18. 18.  Work Cover  Payroll Tax  Government  Bank Accounts  Insurance  Directories/Association s www.lewistaxation.com.au
  19. 19.  Business Objectives  Business Mission  Business Plan, Budgets Statement and Cashflow Forecasts  Accounting and  Regular accounting Management reports Information System  Board of  Internal Control System Directors/Board of  Types of books and Advice records  Employees’ Agreements, Condition s and Contracts  Key Performance Indicators www.lewistaxation.com.au
  20. 20.  Location  Layout of premises  Does the market exist?  Estimated expenses  Break-even level of sales required  Break-even point, including your salary  Credit Policy www.lewistaxation.com.au
  21. 21.  Bankcard, Master  Local events register Card, Visa Card  What is happening in the  Other cards – Diners’ local area? Club, American Express  Do you need all the etc assets?  Government and Council  Buy carefully requirements  Listen to experienced  What are the potential employees risks?  Develop an ability to get  Can you handle the on with people work?  Staff Manual  Communication facilities  Traffic flow  Off season planning www.lewistaxation.com.au

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