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How does the new tax law benefit business buyers?

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To answer that question I went on a search though the googlesphere to see what I could find.

Please remember I'm not an accountant nor have I actually read the tax law, I just searched for news articles about the law. 

So far I came up with three things:




Tax rates are lower.
If you are a buyer, that means that the profit the company has to make in order to provide you with the after tax return you need is lower. That means you should able pay less the get the income you want from a company. Definitely a big winConverting to C Corp is 'cheaper'.
Its pretty obscure, but you can spread out certain tax liabilities due to accounting changes over 6 rather than 4 years, and certain previous income can taxed as a pass through longer. Since sometimes buyers need to convert to a C corp for financing purposes, this may benefit them. Simplified Accounting.
Business under $25 million in average revenue can use simplified accounting methods. Before, the limit was $5 million in average re…

Should you Buy or Start a Business

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Once you catch the run-my-own-business bug, you may start to wonder if you should start or buy a business. While either option is a worthwhile approach, there are some advantages (and disadvantages) that are may be overlooked during your decision making process. I've tried to summarize some of these items in this chart.


This chart assumes that you do 'everything right' buying or starting a business. A bad buying decision could be worse in all areas, as could a bad startup plan. Either approach is a good approach so make sure, that in addition to the pros and cons, you make the choice that works for you.

The Basics of Financial Statements -- Income Statement Terminology

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An Income statement is to a business, what the scoreboard is to sports. It tells you if you winning or loosing and by how much. If you are buying a business the income statement tells you if the business making money, if its selling its products, and how good it it is at doing both.

The income statement reflects the performance of the company over some period of time time.  The income statement is also called a profit and loss (P & L) or an earnings statement

Sample Income Statement  

Income Statement Line by Line
1. Time Period. Statements are usually by year or quarter (3 months)  But may also be to -date (partial year up to the date of the income statement). Multiple years may be shown on the same statement to help with comparisons.

2 -5. Revenue section tells you about the money a business brings in. Also called sales. There may be multiple sources listed, of different types, based on the type of business. In the case of the hot dog stand It's broken out by type of customer…

The Buying a Business Master To-Do List

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The journey of a thousand miles begins with one step -- Lao Tzu Its also good to have a map.  I've created a road map of sorts for buying a business. You can find it here, (There is  also a link to it at the top of this blog as well Buying a Business --Step by Step.) I plan to use it not only as guide to buying a business, but also as an outline for this blog. I expect it may change over time as we learn more about this process, so please check back occasionally.

Why did I create this a 'Buying a Business' blog

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I was running through my weekly Feedly reading list, and I came across this article/ podcast entitled  Why You Should Buy a Business (and How to Do It) from Harvard Business Review (hbr.org). The headline was 'clickbait' for me. I've always been interested in running a business, but never really thought about buying one. I figured I'd listen to a bit of the podcast and see it was about. I was intrigued. I bought the book (its the first item in this book review post).  I also read four other books, listed on the aforementioned book review post.

Throughout this process, some questions also came to mind. Why hadn't I thought of this before? Why don't we talk more about buying small businesses?  In the 'entrepreneurial world', we talk about bootstrapping, incubators, and unicorns, but we never talk about simply buying an existing business. I guess its not as romantic the founding of Facebook in a dorm room, or the founding of Hewlett-Packard in a garage. W…

'Buying a Business' Book Reivews

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Here are quick reviews of all books I read so far while researching buying a business.

[All of the book title links are affiliate links to Amazon]

HBR Guide to Buying a Small Business: Think Big, Buy Small, Own Your Own Companyby Richard S. Ruback, Royce Yudkoff.  The book associated with the podcast in this post). This book provides both information about buying a business and also a framework for picking a business. They suggest an 'Enduring Profitable'  business. The provide both parameters for a search and methods. The book tends to approach the issue from the point of view of an MBA, but its still understandable. It suggests a financing  approach that I wouldn't have thought of.  It has no bias for or against business brokers. This book is worth buying.

The BizBuySell Guide To Buying A Small Business: A road map to the successful purchase of a business by Ed Pendarvis.  This is book was a quick but informative read. It's sponsored by a a business listing website. I…