1. Type of industryBoth small and big business focus on selling/trading goods and services, but they still fall under certain industries. Some of the industries you can choose from include:
- Food & Drinks
- Real estate
2. Status of the companyThis refers to the overall status of the company. You have to know the following to know the status of the company:
- Business registration – is it registered or not?
- Financial status – is it near to bankruptcy?
- Position of the business in the market – is it a big player or a small player?
- Sales performance of the company at least in a 5-year span
3. Accounting – Assets and LiabilitiesBefore buying a business, you should also be familiar with the current accounting status of the company which includes the assets, liabilities, equities and revenues. All of these depend on the type of business you are going to acquire and how will you buy it. You could buy partnership, shares of stock, or even just the assets.
AssetsAssets refer to the properties or items owned by a company. These things are essential to a company’s growth. These could be in a form of buildings, machineries, vehicles, office materials, or anything that could add value to a company.
LiabilitiesLiabilities refer to a company’s legal debts or obligations. (Source: Investopedia) Liabilities include loans, account payables, etc. You should have a formal arrangement when it comes to paying those liabilities. Same as accounts receivable, there could be remaining debts from customers to the company you are going to acquire. There should also be a formal arrangement on how to settle those debts.
4. TaxesCorporate taxes are part of having a business. You should be aware of the different types of taxes and how much these taxes would cost (even roughly). Remember, taxes vary in different states. There five types of business taxes for small businesses namely:
- Income Tax
- Estimated Tax
- Self-employment Tax
- Employment Tax
- Excise Tax