Cpa Kaival PatelDirector, Profuture Tax Academy · Helping Small Business, CPA & Bookkeepers to Grow

Buying a Business? Don’t Skip These Steps #businesstax #corporatetaxes #buybusiness #canadabusiness

Name: Buying a Business? Don’t Skip These Steps #businesstax #corporatetaxes #buybusiness #canadabusiness
Uploaded: 2025-01-02T15:04:58+00:00
Duration: 1 min 22 s
Channel: Cpa Kaival Patel
Description: In this short instructional video, the speaker outlines five essential steps to avoid costly mistakes when purchasing a business. First, he advises…

2 Jan 2025 · 1 min

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1:22

In this short instructional video, the speaker outlines five essential steps to avoid costly mistakes when purchasing a business. First, he advises reviewing the financial statements—profit and loss, balance sheet, and inventory valuation—to confirm profit trends and ensure inventory isn’t overstated. Second, he recommends checking Google Business reviews and reading the actual comments to gauge reputation beyond star ratings. Third, he stresses verifying the seller’s CRA (Canada Revenue Agency) account for any outstanding payroll or HST liabilities, which may signal cash‑flow problems. Fourth, he highlights the need to examine existing vendor and employee contracts for unpaid dues, vacation pay, or other obligations. Finally, he emphasizes a seven‑day observation period, where the buyer can physically operate on the premises to observe real‑time customer traffic, average ticket size, and weekday versus weekend sales, providing a realistic picture of revenue. The speaker ends with a call to follow for more tips.

Chapters

Don't ever make this costly mistake while buying a business. Follow these 5 steps to protect your investments. The 5th one is the most crucial one. First, review the financials. Ask for profit and loss and balance sheet. See the increasing trend in the profit as well as sales. Also check whether the inventory valuation has been correct on balance sheet or not. Often, oftentimes it's overstated and thus increasing the asking price. Second, Check Google Business Review and Ratings. A 4-star, 5-star might be good, but read the reviews. Third, check for seller CRA account. See if there is a payroll dues or HST due outside of CRA. If there is, most likely business isn't making enough profit and running into the losses. Fourth, don't forget to review existing vendor and employee contract. See if there is outstanding dues or vacation pay which are long due and still needs to payable. And the fifth one, most crucial, observation period. Oftentimes you can ask your realtor to add 7-day observation period into the deal. So what happens is you can physically go there for 7 days anytime. You can check how many customers are coming, what are the average ticket price. Basically, you can sit at the seller's location and see how much revenue. So this way you get a realistic idea. So get a realistic idea for weekday sales as well as weekend sales. Follow for more tips.