Hero light

Top 5 Red Flags to Watch For When Buying an Online Business

Buying an online business is not only the beginning of an exciting new venture but also boosts your growth strategy and profit as well. It requires time, ample research and money. You need to pay a very close attention to details before buying a business. Even if a deal sounds good on paper, there may be some things that might go wrong, especially after buying the business. Here are 5 red flags you should watch when buying an online business:
1. Withholding Owner: While most owners will reveal business information but they might downplay valuable business-related information. It is also important to know what the owner plans to do after selling the business, as the owner might be considering opening a business competitive to the one you’re buying.
2. Failing Equipment: Replacing or repairing faulty or failing equipment is a difficult and expensive task. You should make sure that every equipment is in working business. You should also make sure that the business owns the furniture and equipment outright and it is not leased equipment.
3. Financial Inconsistencies in the Records: You should check if the owner has had the business audited by a reputable CPA firm. If the owner says that he had the business audited by someone he knows, it should be a big no-no for you. You should ensure that the business has a clean financial record and you can also have another CPA firm audit the business.
4. Taxes: It’s critical to review business taxes before buying a business and make sure that the owner is up to date with taxes. You should check especially for sales tax with small businesses, as they might undervalue their income to pay less tax. If the taxes aren’t properly paid, you will be held responsible for it after you buy the business.
5. Debts: If an owner has outstanding debts, make sure that he pays them before you buy the business. Debt collectors can get messy and you don’t want to get involved in that hassle.
When looking to buy a business, you should contact ValleyBiggs as it will help you go through the process smoothly and hassle free. The company has a team of skilled professionals with years of experience under their belt who

Published on: October 22nd, 2018