2 minute read
Brokerage Matters
Many business owners handle large volumes of cash on a daily basis and the temptation to leave some out of the bank bag to avoid paying a slice to the tax man is often irresistible.
Unfortunately though, not declaring the folding stuff is breaking the law and risking fines. Owners are also costing themselves money from the loss of goodwill should they have to sell the business.
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For example, a business may achieve a goodwill amount of 2.5 times the net profit. If the owners are taking $1,000 per week in cash, they have effectively devalued their business by $130,000. That is a similar amount to the tax payable on six years’ worth of the cash taken.
So, why risk it when you can increase the value of your business and legally take the money without the worry of an audit from the tax department?
Often business owners have exit plans in place to stop taking cash before they go to the market. Fabulous if you are one of the few that can choose when you sell.Unfortunately, every year thousands of owners are forced to sell unexpectedly due to illness, partnership breakdowns or general market conditions.
In these scenarios only the current financials will determine how much you achieve. This is why it pays to be prepared to sell your business at any time.
My advice - bank the cash, pay the tax, sleep at night and enjoy a great result when you are ready to sell your business.
ROD RUSSELL Savvy Business Sales ABOUT THE AUTHOR Rod’s unrivalled professionalism and years of experience have earned him the reputation as the Sunshine Coast’s most successful business broker. He continues to raise the standards in business sales.
BUSINESS SAVVY. YES WE ARE! business savvy. yes we are.
If you are considering buying If you are considering or selling a business, call buying or selling a busines, the Sunshine Coasts’s most call the Sunshine Coasts’s experienced team. most experienced team.
Our motto is ‘raising the standards in business sales’ and we are fiercely committed to providing our clients Our motto is ‘raising the standards in business sales’ the very best opportunity to achieve maximum results and we are fiercely committed to providing our clients in the sale and purchase of their business. the very best opportunity to achieve maximum results in the sale and purchase of their business
