Starting/Taking Over a business

[simmer2]

Originally Posted by HockeyPuck

I'm sorry, I'm not familiar with these terms - it's a privately owned company, so no shares involved... The owner just pretty much told my wife she wants to sell the business, and if we're interested, make an offer.



I believe they lease.



Yeah, we definitely need to do our homework. I figured I would have to do more work than posting on an internet forum!

Check your PM.

[Flames_Gimp]

pm me i might be interested in small investment..

[Slava]

Originally Posted by troutman

Get advice from an accountant and corporate lawyer.

.

I would highly recommend taking out all kinds of lines of credit and such before you make the transition to being self-employed as well. The best time to get a line of credit is when you don't need one!

Also if you need/will want disability coverage you should hook that up before you make the jump. Basically anything that is income dependent should be in place before you make the change...

[SeeGeeWhy]

Originally Posted by HockeyPuck

I'm sorry, I'm not familiar with these terms - it's a privately owned company, so no shares involved... The owner just pretty much told my wife she wants to sell the business, and if we're interested, make an offer.

Every corporation has shares whether they are private or public.

There are certain implications to buying shares vs buying assets.

When you buy shares, you are assuming ownership of EVERYTHING related to that business, including all liabilities. There is a potential tax advantage to the owner since they will likely be able to use their one time capital gains exemption to write down the proceeds of the sale of their shares.

Puchasing the assets is just that - you're buying the tangible assets of the company and not assuming any of the liability. There is usually a tax advantage to the purchaser since the equipment has likely been depreciated below the true market value. When you buy assets, you can 're-write' the book value of the assets to reflect current market value and thus gain a tax shelter through the amortization expenses that will be realized going forward.

Originally Posted by HockeyPuck

I believe they lease.

Be careful with this. How much longer are they at this location? Is the lease rate current with respect to current market values? Lease expenses are a major source of negotiations for you when determining a price for the business.

Originally Posted by HockeyPuck

Yeah, we definitely need to do our homework. I figured I would have to do more work than posting on an internet forum!

If you have more questions, feel free to PM myself or Simmer2.

[Ford Prefect]

Originally Posted by Slava

.

I would highly recommend taking out all kinds of lines of credit and such before you make the transition to being self-employed as well. The best time to get a line of credit is when you don't need one!

Also if you need/will want disability coverage you should hook that up before you make the jump. Basically anything that is income dependent should be in place before you make the change...

Ya got that right. It took about 10 years after I went into business before any banks, credit cards companies, etc. would give me the time of day. I really wish I would have been given the advice you gave about before hand.

[Antithesis]

This may be really basic, but on the topic of family/friends, if you include them in the initial investment, you need to lay it out exactly as you would a business case. They also need to know that it would be most prudent to consider the money they 'lend' gone, and if they get any of it back, it's a pleasant surprise.

[Peanut]

Originally Posted by Antithesis

This may be really basic, but on the topic of family/friends, if you include them in the initial investment, you need to lay it out exactly as you would a business case. They also need to know that it would be most prudent to consider the money they 'lend' gone, and if they get any of it back, it's a pleasant surprise.

Quoted for truth!!