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Discussion Starter · #1 ·
I'm thinking to buy a small business and I want your tips for how and what to check before buying.

How can I know that the seller isn't faking documents like annual report, balance statement, income statement, etc...

Cheers!
 

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Buying any business can involve considerable risk and the yes the onus is on you to checks on claims or have them done for you.

I personally would expect to see Taxation Office documentation on returns for several preceding years and as most small businesses use the services of an accountant, there ought to be P&L and balance sheet documentation from an accountant.

If there is not official documentation available I woiuld be smelling something is amiss.

And then there are other matters to be checked on as well, building/equipment lease conditions and generally what is happening that may affect future business and that could be perhaps new shopping centres or a business park being built or planned, something that in effect could draw business away from your locale and how is the business of clients if you're buying a business that has other businesses as clients, have they been happy with servic provided, are they making plans to relocate or given economic climate are they in danger of ceasing business.

And then of course, will you be reliant on bank support re cash flow and even if not contacting banks may be another way to investigate whether the business is in deed a good buy as banks have small business officers with experience and could offer some good advice.

If there are employees, that is another whole area re what entitlements they may have re annual and long service leave, is superannuation paid up etc.,all part of the liability of the business.
 
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