1. BEGINNING IN BUSINESS Business Set Up And Purchase Lorraine Thornton 1Paper 001-003

2. 2 1.Setting Up Determine salary and profit expectations for:  your time  your investment  your expertise Be realistic in your expectations Survey the market

3. Paper 001-0033 Obtain work in that type of business Lifestyle? Match skills, knowledge and experience List assets that you will require Are there any businesses for sale? 1.Setting Up cont'd....

4. Paper 001-0034 2.Consultation With Professional Accountant Type of entity Documentation required Explanation of entity’s operation

5. Paper 001-0035 2.Consultation With Professional Accountant cont’d....... Feasibility Study:  Sales  Overhead expenses  Wages  Set up costs  Budget  Break even levels  Sensitivity Analysis  Cashflow Forecasts  Pay As You Go (PAYG) tax payable  Business Benchmarks Comparison

6. Paper 001-0036 Statement of Net Worth Projected Balance Sheet Ongoing role of accounting firms Competent Commercial Solicitor Bank interested in small business 2.Consultation With Professional Accountant cont’d.......

7. Paper 001-0037 3.Purchasing A Business Financial accounts last 5 years Tax returns last 5 years Debtors’ Aged Analysis

8. Paper 001-0038 3.Purchasing A Business cont’d.... Access to:  Cash Payments Book  Cash Receipts Book  Tax Invoice Books  Journals  Bank Deposit Books  Bank Statements  Ledgers  Creditors’ Aged Analysis  Creditors’ Invoices  Stock records  Work in progress records  Wages records  Order Book  Lease Agreements

9. Paper 001-0039 3.Purchasing A Business cont’d.... Is the Vendor running a similar business? Check purchases, sales and wages Restraint of Trade Will customers remain? Review stock History of the business Market share Competitors Suppliers

10. Paper 001-00310 3.Purchasing A Business cont’d..... Suppliers’ Terms of Trade Terms of Trade with Debtors – are they enforced? Are Tax Invoices and Statements prepared promptly? Check plant and equipment Is the plant owned, leased or on hire purchase? Leased premises – get a copy of the Lease Agreement Landlord’s approval for transfer of Lease

11. Paper 001-00311 3.Purchasing A Business cont’d..... Check the Lease – what would your obligations be for:  removal of equipment at the end of the Lease?  rectification of premises?  option periods?  exercise of options?  painting?  repairs and maintenance?  re-fit requirements?

12. Paper 001-00312 3.Purchasing A Business cont’d... Acquiring the building? – Check Title Deed details Zoning Apportionment of price If taking over Debtors – BEWARE! What employees are you retaining? Holiday, Sick and Redundancy Pay Long Service Leave

13. Paper 001-00313 Customer List Vendor’s intention Vendor assist in the changeover? Valuing of stock Politics Gazetted hours Wages for staff What is the state of the economy? 3.Purchasing A Business cont’d...

14. Paper 001-00314 3.Purchasing A Business cont’d.... Monthly Sales Dissection Review Debtors’ Ledger – any large credit notes? Credit Worthiness Report on the business Social behaviour changes Technology changes Town Planning Regulations Customers – who are they? – demographics?

15. Paper 001-00315 3.Purchasing A Business cont’d Review the operations of the business Employee work specification Does the business have the right product mix? Any patents, trademarks, licenses, copyrights? Order Book Partially completed contracts – check! Creditors’ Aged Analysis Check the bank reconciliations Quality control Check suitable systems and policies for GST Check on stock buying patterns

16. Paper 001-00316 Remember, what you are looking for are clues that the business is not what it is being built up to be! The buyer must beware – check, double check and cross check everything! Once you sign the contract, it is very difficult to renegotiate.

17. Paper 001-00317 4.Registrations Required Business Name Australian Taxation Office:  Withholding Tax  Public Officer (Company)  Australian Business Number  GST Registration

18. Paper 001-00318 4.Registrations Required cont’d........ Work Cover Payroll Tax Government Bank Accounts Insurance Directories/Associations

19. Paper 001-00319 5.Accounting Work/Advice Business Objectives Business Mission Statement Accounting and Management Information System Internal Control System Types of books and records Business Plan, Budgets and Cashflow Forecasts Regular accounting reports Board of Directors/Board of Advice Employees’ Agreements, Conditions and Contracts Key Performance Indicators

20. Paper 001-00320 6.Other General Matters Location Layout of premises Does the market exist? Estimated expenses Break-even level of sales required Break-even point, including your salary Credit Policy

21. Paper 001-00321 6.Other General Matters cont’d... Bankcard, Master Card, Visa Card Other cards – Diners’ Club, American Express etc Government and Council requirements What are the potential risks? Can you handle the work? Communication facilities Traffic flow Off season planning Local events register What is happening in the local area? Do you need all the assets? Buy carefully Listen to experienced employees Develop an ability to get on with people Staff Manual