Mergers & Acquisitions
Preparing a Business for Sale
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Preparing a Business for Sale
The cash basis and accrual basis of accounting are two different methods used to record revenue and expenses for accounting purposes. The main difference between accrual and cash basis accounting is in the timing of when revenue and expenses are recognized. The results of the two methods are similar over time, but results between cash and accrual-based financial statements can differ substantially in the short term due to when revenue and expenses are recognized. Cash Basis Method Under the cash basis method, revenue is recognized on the profit and loss statement when cash is actually received, and expenses are recognized...
Read MoreWhen you are planning to sell your business, one thing you need to consider is the type of customer you have. Does your business have one-time, repeat, or recurring customers? You may be surprised to know that the type of customer you have can have a dramatic impact on the value of your business. One-Time Customers As the name implies, one-time customers are those who find your business, make a purchase, and are never heard from again. One-time customers have no loyalty to your business. Further, it takes a lot of money to acquire a customer, and getting one in...
Read MoreIn general, you should avoid switching accounting systems if you are in the process of selling a business. Although there are some exceptions (which we will discuss later), the majority of the time we recommend staying with your current accounting system if you’re planning to sell in the near future. QuickBooks is currently the most popular accounting system for small businesses, but that is slowly changing with the introduction of more modern, streamlined cloud-based systems. Switching to a new accounting system is a major project and should only be undertaken with proper professional assistance. While software companies claim they can...
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