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Accountants for Buying a Business
Buying a business is one of the most significant decisions you’ll ever make. Many business owners feel overwhelmed by the complexities, from understanding financial statements and negotiating fair purchase prices to ensuring tax efficiency and structuring the acquisition for long‑term success.
Our Perth-based accountants and business advisors are available to assist you, using their first-hand experiences to help make your journey into business ownership a success.
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Tax Minimisation Strategies ReportAdvice from Accountants for Buying a Business in Western Australia
The rest of this page is dedicated to providing you with an overview of the typical problems and associated solutions with regard to buying a business. These apply whether you are buying a business in Perth, elsewhere in WA or across Australia.
We’ve helped countless people along the business acquisition journey and stand ready to help you. When you’re ready to talk, book a meeting or send an enquiry.
The Problem:
When you’re considering buying a business, questions immediately arise: Are the financials as healthy as they appear? Could hidden liabilities derail your investment? Will the purchase structure suit your future growth plans? Without clear, specialist advice, you risk making costly decisions that could jeopardise your new venture’s success.
Our Solution:
At Munro’s, we take a holistic, problem‑solving approach. We work with you from the initial assessment through to closing the deal. Our process includes:
- Comprehensive Due Diligence: We review financial records, assess cash flow and identify potential risks.
- Tailored Acquisition Advice: We guide you through negotiations, assist with business valuation and recommend the optimal purchase structure, ensuring that the business fits your growth ambitions.
- Tax & Compliance Strategies: Our specialists ensure that every transaction complies with Australian tax laws and that you benefit from available concessions and planning opportunities.
- Ongoing Support: After the deal is closed, we continue to support you with business advisory and accounting services that help you integrate your new acquisition smoothly, attend to ongoing accounting and tax, and plan for future growth.
Key Outcomes and Benefits:
- Informed Decision-Making: With our thorough due diligence, you gain a clear picture of the business’s true value and potential.
- Risk Mitigation: We identify red flags early so that you can avoid costly pitfalls.
- Optimised Structure: Our recommendations not only protect your investment but also set the stage for tax efficiencies and long‑term business growth.
- Peace of Mind: With Munro’s by your side, you can focus on the opportunities ahead, confident that you’re making a secure investment.
Problem 1: FOMO
The fear of missing out is so powerful and can lead people to make terrible decisions. Buying a business requires you to put a lot of wealth on the line. You’ve got to think clearly and sceptically.
Solution
Be sceptical.
Outcome
Reduce the chance of buying an overpriced / non-profitable business.
Read Key Points & Transcript
Be Sceptical
video key points
- When purchasing a business, approach every piece of information provided by the seller with a healthy scepticism, acknowledging that they may present the business more favourably than it is.
- Scrutinise financial adjustments, such as add-backs to the net profit, that may inflate the business’s profitability appearance.
- Verify claims about the seller’s involvement and hours spent in the business through impartial sources, rather than taking them at face value.
- Recognise the potential for your personal bias, especially when excitement or the fear of missing out (FOMO) might cloud your judgement, affecting the objective assessment of the business.
- Approach the process with enthusiasm but maintain a critical, sceptical mindset to avoid costly mistakes. For further guidance in navigating the complexities of buying a business and to avoid common pitfalls, we are here to assist.
Presented by: Mike Beer
video transcript
Transcript available on the Business Acquisition Advice page.
Problem 2: Financing
How are you going to fund the purchase of the business? Do you need extra funds to satisfy ongoing financial obligations? What additional liabilities, guarantees and risks are you going to take on? Will you have sufficient cash to survive and eventually thrive?
Solution
Appropriate funding.
Outcome
The money you need to survive and thrive.
Read Key Points & Transcript
Financing the Purchase of a Business in Australia
video key points
- Financing a business purchase involves careful planning, including realistic financial projections and scenario analysis for the initial years to gauge cash needs and funding requirements.
- Many buyers underestimate costs like legal fees, settlement fees and additional charges, which can lead to financial strain if not properly accounted for.
- Choosing the right loan involves evaluating various factors such as the bank, loan product, security and guarantees; a business finance broker can be a helpful guide in this process.
- Your business entity structure should be optimised for tax benefits and wealth protection, with careful consideration given to the tax deductibility of interest.
- For investor funding, ensure thorough legal documentation, clear ownership agreements and exit plans are in place to avoid potential conflicts.
- For further assistance, explore our Buying a Business Diagnostic for additional insights, join Munro’s Business Academy and book a free Get To Know Each Other meeting.
Presented by: Sanjay Nair
video transcript
Transcript available on the Financing a Business Acquisition page.
Problem 3: Setup for Future Tax Success
Tax is generally unavoidable, but the amount of tax you pay in the future will be heavily influenced by decisions made now.
Solution
Setup tax planning.
Outcome
Bare minimum tax.
Read Key Points & Transcript
Setup A Business Purchase for Future Tax Success
video key points
- Proactive tax planning allows business owners to legally minimise taxes, reinvest in their business or personal enjoyment, and manage cash flow with clarity on tax obligations.
- Choosing the right entity structure (Sole Trader, Partnership, Company, Fixed and Family Trusts) is critical and tailored to individual circumstances for optimal tax benefits.
- Income splitting through family trust structures with a company as trustee can significantly reduce tax liabilities over time.
- Utilising structures that enable income splitting and accessing Small Business CGT Concessions during the sale of a business can result in substantial tax savings, potentially reaching zero capital gains tax.
- Aspiring business owners are encouraged to consult with a trusted advisor to navigate and benefit from strategies for legally minimising taxes.
Presented by: Rama Yudhistira
video transcript
Transcript available on the Tax Planning for New Businesses page
Problem 4: Assets & Liability Protection
Operating a business increases exposures to extra liabilities and requires safeguarding of existing and new wealth as best as possible.
Solution
Basic asset protection + optionally advanced protection.
Outcome
At least the bare minimum wealth protection you should have.
Read Key Points & Transcript
Asset Protection When Buying A Business
video key points
- Proper asset protection is crucial when starting or buying a business, ensuring the safeguarding of assets and wealth.
- Principle #1: Business risks must be kept separate from investment assets, necessitating at least a “Level One” structure comprising a Trading Entity and an Asset Holding Entity, with the latter avoiding business relationships.
- Principle #2: Designate one individual within a Family Group as the “Risk-Taker” and another as the “Asset-Holder,” ensuring the Risk-Taker engages in business activities without holding assets in their name, making them less appealing for legal action.
- For effective asset protection, the Asset-Holder should own the family home outright and secure sufficient income to cover loans and asset repayments, preventing financial vulnerabilities in case of the Risk-Taker’s bankruptcy.
- To further explore asset protection strategies and their importance, see the Wealth Protection for Business page or book a Get To Know Each Other meeting via the How We Get Started page.
Presented By: Saul Segal
video transcript
Transcript available on the Asset Protection for New Businesses page.
Problem 5: How to De-risk
When arranging a due diligence, you should really follow the classic wisdom: you can’t just look at the iceberg above the ocean surface because there is so much hidden and dangerous below.
Solution
Comprehensive due diligence.
Outcome
Make a fully informed decision and know what you’re getting into.
Read Key Points & Transcript
Due Diligence During A Business Acquisition
video key points
- Due diligence is essential in uncovering the truth about a business’s claims, facts, and overall situation, aiding in determining its worthiness for purchase.
- Comprehensive due diligence, encompassing tax and legal aspects, financial analysis over several years, customer and supplier analysis, and key dependency risks, is advocated over limited due diligence to mitigate substantial financial risks.
- Limited due diligence may highlight immediate financial health, but could miss critical issues like customer dependency risks, leading to potential major revenue losses post-purchase.
- Examples illustrate the dangers of limited due diligence, including operating against local laws unknowingly, which can result in severe consequences for the business.
- Always opt for comprehensive due diligence to uncover hidden risks and ensure the business has the best chance for long-term success; consider revisiting negotiation or exploring alternative options based on findings.
Presented by: Mike Beer
video transcript
Transcript available on the Due Diligence Advice page.
Problem 6: Going into Business with Others
Whether you’re going into business with family or friends, it’s important to recognise that business life and the stresses it brings will give rise to new and sometimes challenging issues.
Solution
Clearly defined and understood intent with a proactive dispute resolution agreement.
Outcome
Mitigate the potential of messy and costly future disputes.
Read Key Points & Transcript
Prepare For Buying a Business With Others
video key points
- Partnering in business offers potential ease but also complexity; consider vision alignment, defined roles, and conflict resolution systems.
- Critical to establish a fair shareholders’ agreement and a plan for potential exit scenarios to protect relationships and business integrity.
- Advising on partnerships involves scrutinising agreements for fairness, ensuring your interests are protected.
- An example is discussed where a client is advised against an unfavourable agreement, highlighting the importance of professional advice in safeguarding interests.
- Don’t hesitate to reach out for a preliminary discussion before entering partnerships so that you maximise success chances and protect your interests.
Presented By: Rama Yudhistira
video transcript
Transcript available on the Shareholders Agreement page.
Problem 7: Setup Bookkeeping in Xero, MYOB, Quickbooks, etc
We cannot stress enough how vital it is to setup an accurate accounting system from the beginning.
Solution
Startup bookkeeping.
Outcome
Clean financial information from the beginning as opposed to a costly, uninformative mess.
Read Key Points & Transcript
Setup Accurate Accounting When Completing A Business Purchase
video key points
- Maintaining accurate financial records is crucial for business success, yet it’s commonly neglected or mishandled.
- The initial setup of an accounting system, if done inaccurately, can lead to costly mistakes affecting time and financial resources.
- A professional example highlights the complexities and potential mess arising from self-managed bookkeeping connected with professional software.
- Key accounting tasks such as payroll, debtor collections, creditor obligations, and GST compliance grow in complexity with business expansion, requiring skilled bookkeeping.
- Effective bookkeeping delegation relies on a well-functioning system, underscoring the value of professional setup to save time and money and support business growth.
Presented by: Rama Yudhistira
video transcript
Transcript available on the Business Bookkeeping page.
Problem 8: Employing People
Employment, tax and superannuation laws impose a heavy burden on employers and you must give this responsibility the attention and care it requires.
Solution
Skilful and pragmatic support with implementing employment basics.
Outcome
Legally compliant employment arrangements.
Read Key Points & Transcript
Employing People During Business Acquisition
video key points
- Before hiring, assess your business needs to decide between a contractor and an employee, considering tasks, skills, workload, duration, and employment type (full-time, part-time, or casual).
- Comply with Fair Work Employment Standards, including issuing payslips, adhering to minimum standards and pay rates, providing paid annual and personal leave for full and part-time employees.
- Meet legal obligations such as PAYG Withholding, superannuation guarantee contributions, workers’ compensation insurance, and consider additional insurances to safeguard your business.
- Set up systems including Single Touch Payroll (STP) for up-to-date payroll reporting to the ATO, SuperStream for efficient superannuation payments, and prepare a detailed employment agreement to protect your business’s intellectual property.
- Hiring and managing employees is an ongoing relationship requiring communication, feedback, and support to build a motivated team. For assistance with business and employment matters, we’re here to help.
Presented by: Saul Segal
video transcript
Transcript available on the Payroll Accounting & Employing People page.
Problem 9: Business Ownership Education
There is no one who knows everything about business. From the moment you buy your business, you’ll need to continually upskill to meet the challenges. Don’t start from scratch; tap into the knowledge and learnings of others.
Solution
Sprints, blended learning, community insights and coaching.
Outcome
The best leader you can become, as quickly as you can get there.
Read Key Points & Transcript
Learning The Skills To Grow A Purchased Business
video key points
- Managers, while experts in their domains, often lack crucial leadership skills for sustained business success, underscoring the need for focused training and coaching in business leadership capabilities.
- The wisdom of Ayman Al-Abdullah, echoing JFK, suggests that leadership and learning are intrinsically connected, highlighting the misconception among some leaders that reaching a leadership position negates the need for further learning.
- Incremental improvements in knowledge and skills by leaders can have significant, positive impacts across their organisations, leveraging leadership as a tool for widespread improvement.
- Addressing the challenges of leadership capability development involves determining the timing and extent of learning, identifying essential skills aligned with business strategy, and choosing effective learning modalities to combat the forgetting curve.
- Emphasising the importance of learning for results rather than mere knowledge accumulation, Munro’s offers tailored learning programmes and leadership improvement initiatives through Munro’s Business Academy as practical steps towards enhancing team performance.
Presented By: Drew Pflaum
With Thanks To: Ayman Al-Abdullah
References page.
video transcript
Transcript available on the Business Improvement Workshops, Sprints & Programmes page.
Frequently Asked Questions for Buying a Business
-
What are the first steps in buying a business?
Before proceeding, you should conduct preliminary research, understand your financial capacity (can you get a loan) and arrange for specialist advice. We help you assess whether a business aligns with your growth plans. -
How do I know if a business is fairly valued?
Our valuation process uses multiple methods to ensure accuracy, considering cash flow, assets and market trends. We compare industry benchmarks to determine a fair price. -
What if I find hidden liabilities during due diligence?
Identifying risks early is crucial. We advise on mitigating strategies and this may allow you to renegotiate terms based on unforeseen liabilities, ensuring you don’t overpay for potential risks. -
How can tax planning help when buying a business?
Effective tax planning can significantly reduce your tax burden in the future. We work with you to structure the deal in a tax‑efficient manner, ensuring you take advantage of all applicable concessions and deductions. -
Are your services available only in Perth?
While Munro’s is proudly based in Perth with deep local expertise, our compliance and advisory strategies are effective for businesses throughout Australia. -
What makes Munro’s approach different?
We are known as “The Professional Problem Solvers” because we focus on understanding your challenges and crafting tailored solutions. Our approach is transparent, value‑driven and backed by over 100 Google reviews praising our responsiveness and specialist advice. -
How can a business accountant help improve my profit following the acquisition?
Our specialists don’t just crunch numbers; we provide actionable insights that can help optimise your operations, reduce unnecessary expenses and ultimately boost your profit margins. -
What is the price for your structuring and due diligence service?
Our pricing is transparent and reflects the complexity of your needs. Please visit our pricing page and contact us for a personalised quote. -
How long does the buying process usually take?
Every acquisition is unique. Generally, the process can take several months from initial enquiry to final settlement, depending on whether you’ve already identified a target acquisition, your access to business loans, the complexity of due diligence and negotiations. -
Can you help if I’m considering a franchise purchase?
Absolutely. We have assisted many clients in purchasing franchises by evaluating their financial performance and negotiating favourable terms.
Where To Begin
Come Along To An Improve Session
First Session is FREE (incl. GST)
Upskilling Event for Business LeadersTop 2% ranked Australian Accounting Firm
Claims of being a ‘Top 2% ranked Australian Accounting Firm‘ (and similar claims) are based on two separate assessments conducted by Munro’s on 9-10 August 2023 and 1 December 2023. The ranking is derived from a comparison of the total of each accounting firm’s overall star rating multiplied by each firm’s quantity of reviews as shown on Google Maps. A total of 4,235 Australian accounting firms listed on Google Maps were identified for the earlier assessment, and a total of 4,301 for the latter assessment, which may not represent a complete list of Australian accounting firms. Munro’s claims are based on Munro’s best estimation and represent a snapshot collected at the time of each assessment. If the assessment was to be conducted today, then it is likely that Munro’s ranking would have changed – Munro’s may or may not be in the Top 2% today. Also, the methodology does not account for other potentially relevant factors such as quality of service, expertise, or client satisfaction beyond Google Maps reviews.
Read Key Points & Transcript
video key points
- Top 2% ranked Australian Accounting Firm is based on two separate Munro’s assessments of Google reviews for Australian based accounting firms on 9-10 August 2023 and 1 December 2023.
- Both assessments found Munro’s to be in the Top 2% (position 66 out of 4,235 and position 44 out of 4,301 for the assessments, respectively) when a ranking was derived from a comparison of the total of each accounting firm’s overall star rating multiplied by each firm’s quantity of reviews as shown on Google Maps.
- If the assessment was to be conducted today, then it is likely that Munro’s ranking would have changed – Munro’s may or may not be in the Top 2% today.
Presented by: Drew Pflaum
video transcript
In December 2023, we conducted a review of Australian accounting firms on Google Maps, based on star rating and quantity of reviews.
Out of the 4,301 Australian accounting firms we identified on Google, Munro’s ranked number 44, placing us in the Top 2% of Australian Accounting Firms. We’re thrilled to share this fact with you and share those reviews on our website. We’d also like to thank all our clients who left us those wonderful reviews.
Thank you.
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Perth WA 6000