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Week Three Stays Positive

   
Week three of April proved to be another positive month for sales. Independent grocers reported that their same store sales were up 1.83 percent compared to the same period in 2015. While still a short period of time, the current three week streak of positive sales is the first time independents have managed this since November of 2014. Hopefully next week April can close out with all positive weeks.

Tomorrow the Bureau of Labor Statistics releases its April unemployment report. Initial estimates are showing that April hiring may have been slower than recent months.

Same Store Sales        
% Change from last year
Same Store Sales – Previous Months
BGBC Partners Tax Update: What if I need a Business Valuation?
   
Assume that a business advisor tells you that you need to have a business valuation done for your store! You start asking yourself questions. Why do I need that? What does a business valuation involve? Who do I get to value my business? These are all good questions to ask, and in this segment of our Tax Update we will help you answer them.

First, why would I need a business valuation? Say you are looking into buying another store, or selling your existing store and would like to incorporate some strategies for tax planning. Or, you have financial reporting requirements, or are involved in a legal dispute. In each of these cases, the value of the business is going to greatly affect the end result.

A valuation can be a major factor in determining a purchase or selling price, can determine your tax liability when making a gift, can be crucial in determining the value of your employee stock ownership plan, or it can help resolve a dispute when a business partner wants to exit. Whatever the case may be, it is good to know that business valuations involve a complex set of procedures which leads us to our next question.

What does it take to value a business? As a store owner, you might think to yourself “I know my business inside and out and therefore know an approximate value; why do I need to pay an appraiser?” Well, valuing a business is not that simple. Internal financial statements are analyzed and ratios are calculated. Current economic conditions are evaluated. Asset value and condition is considered. The number of years in business and size of the company is factored-in.

Furthermore, business valuations can be conducted using multiple generally recognized approaches. There are three main approaches commonly used. The income approach calculates the discounted cash flows, the asset approach calculates the net asset value, and the market approach compares the company to similar companies based on industry, size, and region. This is why it is a good idea to engage an experienced and reputable appraiser.

So, now that you know that you do not want to hire just anyone, who do you get to value your business? The answer to this is a business appraiser. But not just any appraiser who’s advertisements are more widely seen. Rather, there are organizations which certify appraisers to ensure that they meet certain minimum standards.

Business appraisers can be certified through the American Society of Appraisers (ASA), the American Institute of Certified Public Accountants (AICPA), the National Association of Certified Valuation Analysts (NACVA), or the Institute of Business Appraisers (IBA). As each organization has its own set of criteria for exam requirements, experience, and continuing education, choosing one over the other would be based on preference.

Hopefully, we have provided you with a helpful approach to take if you are facing a significant transaction or decision which requires an appraiser. It will be well-worth your money to engage a true professional who can explain the ins and outs of their work and the impact their work may have on the matter at hand. Contact your CPA for referrals of competent appraisers they may have worked with in the past.

Not only will this help you navigate through the complexities of the deal, but it may help you achieve that peace of mind that comes with knowing you are involving the best professionals on your team!

BGBC Partners, LLP is a full service certified public accounting and business consulting practice.  

For more information, contact Brad Bell, CPA or Steve Reed, CPA/ABV/CFF at BGBC Partners, LLP (317-633-4700).


For More Information,
Contact Mark Ehleben
877-435-9400 x1402
marke@fmssolutions.com
8028 Ritchie Highway | Suite 212 | Pasadena, MD 21122


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