MJJ Accounting and Business Solutions

Your Trusted Advisor, Melanie Jacobson and the team at MJJ Accounting and Business Solutions

  • HOME
  • HOW WE HELP
    • ACCOUNTING SERVICES
      • TAXATION AND COMPLIANCE
      • EFFECTIVE TAX PLANNING
      • KNOW YOUR CASHFLOW
      • SUPERANNUATION
      • FINANCING
    • BUSINESS SERVICES
      • STRUCTURING YOUR BUSINESS
      • STRATEGY AND PREVENTION
      • MANAGING YOUR BUSINESS
      • GROWING YOUR BUSINESS
      • RETIREMENT PLANNING
    • SUPER & SMSF
    • BUILDING & CONSTRUCTION
      • QBCC SPECIALIST ACCOUNTANTS
    • OUR PACKAGES
      • FIX UP PACKAGE
      • OVERHAUL PACKAGE
      • ADVICE PACKAGE
      • ESSENTIALS PACKAGE
      • EXTRAS PACKAGE
      • PREMIUM PACKAGE
  • ABOUT US
    • OUR STORY
    • OUR TEAM
    • WHY CHOOSE US
  • TESTIMONIALS
  • BLOG
    • Business Advice – Starting
    • Business Advice – Growing
    • Business Advice – Exiting
    • Compliance & Record Keeping
    • Wealth Creation & Strategy
    • Tax Tips
    • Local and Current Issues
    • Items of Interest
  • CLIENT LOGIN
  • CONTACT

April 3, 2014 By Mel

Buying a Business – Understanding What You Are Really Buying

When purchasing a business it is important to understand and be clear about what it is that you are buying. From the outset you need to understand the difference between buying the business, as opposed to buying the business structure (for example, shares in a company). Once this has been established you must ascertain exactly what assets are included.

A business can consist of many components, some tangible whilst others not. Some information on issues to be aware of when purchasing each type of asset is provided below.

Plant & Equipment – It is generally recommended that the fixed assets of the business are listed in a schedule to the contract and specific amounts are attributed to each item. If the vendor is unwilling to provide a schedule, at the very least you should insist on a separate value for the total plant and equipment. You will later need to apportion the value to individual assets on a reasonable basis or obtain and independent valuation.

Trading Stock – If the business is being acquired with stock, special arrangements will need to be made to ensure you receive what is stated in the contract and have sufficient stock to commence trading. It is usual to adjust the stock value on the day of settlement to reflect the actual value of what is being taken over, as determined by a stocktake.

Premises – If you are purchasing the premises as well as the business you need to evaluate the financial decision to purchase the premises separately from the business to ensure there is an adequate return on the premises should you later decide to rent it to someone else.

Goodwill & Other Intangibles – A successful business will have a value that exceeds the value of the tangible asset such as the plant and equipment and stock – this intangible asset is known as the business ‘goodwill’. The valuation of goodwill can be complex and you need to consider the specifics of each proposed purchase.

 

Filed Under: Business Advice - Starting

What Our Clients Say

Melanie and Renee are very professional, easy to talk to and understand the concerns of small business owners.

Marita McGregor Welcome Baby Gift Boxes

Read More Testimonials

MJJ Newsletter Sign Up

Get the latest MJJ updates on accounting and business solutions.

[mc4wp_form id="3920"]

Latest News

  • How to make your Christmas gifts tax deductible
  • Vacant land holders to lose tax deductions
  • Government crack down on businesses receiving cash payments

MJJ Newsletter Sign Up

Get the latest MJJ updates on accounting and business solutions.

[mc4wp_form id="3920"]

Tax Agent 22691015

Quick Links

  • Home
  • Meet the Team
  • Customer Testimonials
  • Get in Touch
  • Privacy
  • Disclaimer

Liability limited by a Scheme approved under Professional Standards Legislation.

Get in touch

Call 07 5451 1118

Unit 1 - 8 Denna Street
Maroochydore Q 4558

Copyright © 2019 · Education Pro Theme on Genesis Framework · WordPress · Log in