Business Brokers – How to Choose the Right One

The vast majority of small businesses are sold without the assistance of business brokers.

But if you do decide the hire a broker, here are some suggestions on how to pick the right one and how to structure the agreement in your favor.

What Business Is The Broker Actually In?

In many states there is no training or certification needed to become a business broker. In other states, brokers are required to hold a real estate license.

In these states it’s common to find real estate agents that do business brokering as a side business. If you deal with a broker who is also a real estate agent, make sure that being a business broker is more than just his hobby.

You will pay a pretty penny for the broker’s expertise and experience – you should make sure they have that experience when it comes to selling businesses and not just experience selling houses.

Questions To Ask

If you hire a broker you will be working with them closely for months to come; they will have access to your most confidential business records; the amount of money you put in your pocket at closing will be influenced heavily by the quality of work they do.

Therefore, you absolutely must check them out.

Here are some questions you should ask any prospective broker before hiring him:

1. How long have you been a broker?
2. Have you ever owned a business?
3. How many businesses similar to mine have you helped sell?
4. Can I see a blank version of your Listing Agreement?
5. What percentage of you income comes from brokering and how much from real estate (If applicable)

Ask them to provide you with references from previous clients. Then, I suggest you do something very unusual: Actually call the broker’s references!
I know a lot of people ask for references just to see how the person will react when asked (and to see if they actuality have any). But you can learn a lot about the broker’s reliability and professionalism by talking to people who dealt with that broker when they were in the exact same spot you are in.

Business Broker Fees

There are two benefits a broker can provide the business seller. First, he can locate potential buyers while maintaining the seller’s confidentiality. And second, a broker will qualify these potential business buyers so the seller saves time by not having to deal with weak prospects.

The big negative of dealing with a business broker is his fee, which averages 10-12% of the sale price. This fee is charged to the seller.

There is also a minimum fee. A very small business will pay a flat amount, typically $8-$10,000, instead of the commission. For a business worth $50,000 this minimum fee actually works out to be a higher percentage than the 10-12% industry average. But as a matter of practice, brokers usually won’t be interested in your business unless the asking price is above $100,000.

These fees are the reason most business owners choose to sell their business themselves and rely on their lawyers and accountants for the professional assistance they need.

The Broker Agreement

If you decide to use a broker you’ll be asked to sign a broker agreement which will detail the his fees. If possible, have your agreement include the following clauses:

Timing of Payments – Have it written into the agreement that the broker’s fee will be paid at the time you receive the purchase price – not at the time the sale is closed. This way, if you finance part of the sale price over a number of years, you pay the business broker as you get the money, not all up front.

Length Of Agreement – Your listing agreement should be for a limited time. If the broker locates the buyer within that time he gets paid. Be careful of lengthy agreements that lock you in with one business broker for more than 6 months. If he doesn’t produce, you want to be able to try other options. A 6 month business broker agreement is the longest you should allow. However, because selling a business can be a lengthy process, 3 months is usually too little time for the broker to find the right buyer. Try to settle on something between 3 and 6 months. If after six months, you haven’t closed the deal but you think the broker has done a good job, you’re always free to extend the agreement. But you want to be free to decide on an extension 6 months from now, not today.

Broker’s Guarantee – Include a paragraph stating that if you find the buyer, you don’t have to pay the commission. Without this clause, the broker is usually paid no matter who locates the buyer. Before signing any listing agreement, it is best to have your attorney review it to make sure your interests are protected.

Options for Filing and Reporting Small Business Taxes

Large and small businesses all around the United States are required to file and pay taxes. Small business taxes are applied and determined differently than those of larger corporations. To accurately report and pay taxes business owners are encouraged to follow these helpful preparation tips.

Small business owners have the option of filing their own tax returns or they can hire the help of a professional. Professional tax help can come from a certified public accountant (CPA) or professional tax preparer. Each individual is likely to accurately prepare a small business tax return; however, many business owners prefer working with a certified public accountant (CPA). In addition to a filing a federal or state small business tax return, a certified public accountant is experienced in keeping all financial records in order. Having all financial records in order may allow business owners to claim additional tax deductions or tax credits.

It is possible for a small business owner to prepare their own returns; however, the process is often long and sometimes difficult. To make the process easy many people take a tax course or they purchase a tax software program. The majority of tax courses offer valuable information and helpful tips to those who may have to pay taxes. These courses are usually available at a local college or an establish tax preparation business for a small fee.

Since owning and operating a business is a large project there are many business people who are unable to find the time to take a tax preparation course. These people are likely to purchase a tax software program. Tax software programs can be purchased from a traditional retail store or they can be paid for and downloaded off of the internet. The majority of individuals using a tax software program to determine if they owe any money are required to use the premium software versions because they are usually the only tax software versions that supply the forms needed.

When preparing their own taxes entrepreneurs are urged to keep in mind all of the tax deductions that they qualify for. There are many business owners who do not realize that they could qualify for multiple tax deductions. The majority of office supplies and other equipment that is required to operate a business is tax deductible. It is also possible for the owner of the business to donate some of their old office equipment or supplies to a charity. These donations are considered charitable deductions. Many small business owners make the mistake of just tossing out their old equipment because they do not realize that they can receive deductions for donating old equipment as well as purchasing new equipment. Taking a tax preparation course, using a software program, or hiring the services of a professional are great ways for them to learn about the deductions that they may qualify for.

Many business owners decided to start preparing their own taxes only to later learn that figuring out small business taxes is more difficult than they anticipated. Those who are unable to complete their small business tax returns or feel that they made a mistake on the tax forms can take their partially completed tax forms to a professional tax preparer for assistance and further completion.

Compare Business Bank Account Rates – How and Why You Should Compare For Highest Returns

If you have plans to start your own business or if you already own a business, then this article is going to save you more money. Once you start your business, you have to open a new business account so that you can send and receive payments. Banks offer some products for business like small business savings accounts, bad credit business bank accounts etc. But If you spot the best small business bank account, you can get GREAT BENEFITS AND SAVINGS for your business.

How to Choose the BEST SMALL BUSINESS SAVINGS ACCOUNT:

  • You have to analyze the interest rates offered by the various banks for the business savings account. In case if you had bad credit history before and have opened a bad credit business bank account, then you would get a much reduced rates for your savings with tougher norms.
  • If you have opened a business bank deposit account, then the interest varies based on the type. There are instant access deposit accounts, time deposit accounts and restricted access account. The instant access deposit accounts have instant access to your funds, but the rates offered would be much less. Some banks offer better interest for such accounts also. You have to find those banks to EARN MORE INTEREST RATES. In term deposit accounts, you have to deposit your money for a fixed term as decided before for which you will get good interest rates, but you will not get access to your funds during that term. Restricted access accounts gives good rates but with limited access.

What is the next step?

  • Find the interest rates offered by various banks and compare them. You can find the details of various banks in the websites.

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