Banking and Finance services
Things to consider when buying a business or franchise
- Financial records of the business – including profit and loss, balance sheet, and business activity statements etc to assess the financial viability and return on investment.
- Structure of the business – such as company, partnership, sole trader, or trust:
Company: you can own and operate the business as a director, and shareholder. You will be regulated by the Corporations Act 2001(Cth), and be responsible for trading, tax, record-keeping and reporting to ASIC.Partnership: you can own and operate the business with another owner or owners, and the parties be in a partnership meaning each partner is jointly and severally responsible for all the liabilities and debts of the business.Sole trader: you can own and operate your own business through your individual name, and you will be responsible for all business liabilities and debts.Trust: a trustee is appointed to own and operate the business for the benefit of the beneficiaries of the trust, and the beneficiaries may not be personally liable for the business debts.
- Plant fitting fixtures, such as what plant, equipment and machinery’s are included with the business and the Contract of Sale, and depreciation value over time.
- Stock – including consideration as to whether the trading stock is included in the purchase price or in addition to the purchase price or are you obligated to purchase the stock.
- Premises consider the type of real estate contract and/or lease you may be subject to that are interdependent from the sale of the business. Important factors to consider include, rent, option to renew, outgoings and contributions, terms and conditions, relevant Council consents are available for the particular premises, and suitable for the intended usage.
- Contacts and details – ensure all plant, equipment and machinery registration details are transferred to your business and title. Also, ensure all email, phones, and domain details are transferred at settlement.
- Business name – ensure the Contract of Sale includes conditions for the transfer and registration of any business names and titles.
- Existing employees – when employing existing staff members ensure to get their full details, including full name and contact details, salary, employment status and position, any leave and holiday entitlements, and any employment contracts.
- Restraints of trade – consider the geographical location of your business and any potential competitors.
- Goods and Services Tax (GST) – check with your accountant to see if you are required to be registered for GST depending on the type of business.