Four Reasons to Hire a CPA When Buying or Selling a Business
Buying or selling a business is a big move for anyone. Not only are these big financial ventures, but a lot of time and effort is invested in conducting the transaction as well as once the transaction has been completed. You don’t want this time, effort, and money to go to waste. Therefore, it’s important to make sure you’re prepared and have the best possible information and guidance on your side before you buy or sell a business.
How do you do this? You work with a Chartered Professional Accountant (CPA).
Here are four reasons why you should work with a CPA firm when you’re buying or selling a business.
Getting an Accurate Valuation
One of the most important aspects of buying or selling a business is having an accurate valuation. After all, without one, you won’t know what price to buy or sell for and you could wind up spending more than you should or leaving money on the table during a sale.
While you might have a number in mind, it’s crucial that you speak with a CPA to get a proper valuation. Conducting a valuation is complex and it requires a great deal of knowledge and expertise. A CPA can look at the many variables involved (including, but not limited to: financial statements, tax considerations, market assessments, financial transactions, and more) and then use this information and their expertise to determine the fair market value of a business based on current market conditions.
Organizing and Structuring the Deal
Every transaction is different. When you’re buying or selling a business, the deal could take the form or a merger, an acquisition, or another type of transaction. You may be selling or buying a company’s assets, intellectual property, equity, or other assets (and potentially liabilities). The large number of potential variables make these deals very complex.
A CPA will develop a strategic plan for the sale, negotiate and structure the sale agreement, prepare the required documents, and ensure that the deal is closed in a way that is beneficial for their client. Having a CPA firm on your side saves you from dealing with the complex ins and outs of the sale and provides you with a strong, legal agreement that protects your interests.
Understanding Risk
There is always a risk when buying or selling a business. However, working with a Chartered Professional Accountant can help you understand the potential risk in any transaction. For instance, if you are buying a business, a CPA firm will identify and assess the assets, liabilities, financial position, cash flow, and margin returns of the business you are interested in purchasing, helping you understand the risk involved and ensure that you are paying a fair price.
Whether you are buying or selling a business, a CPA can manage the entire sale process to minimize your risk and help you make the right decisions during this difficult and stressful transaction.
Tax Planning
There are always tax implications when you buy or sell a business. When you hire a CPA firm to assist you with the transaction, they will ensure that you not only understand the various tax aspects of the deal, but that you meet the tax requirements and fulfill your tax obligations with the Canada Revenue Agency (CRA).
Depending on the particulars of your business deal, you may have to consider various tax implications including federal and provincial taxes and potentially international taxes as well. You may also need assistance in understanding how the sale or purchase of a business affects your personal tax situation in addition to the taxes of your organization.
Not only can a CPA clarify all of these tax questions for you, and assist you with tax planning so that you can meet your obligations, but a CPA firm can also respond to tax audit requests from the CRA should they arise.
For more information on how a CPA firm can help when buying or selling a business, please contact us today.
