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I am in the due diligence period of purchasing a business

I am in the due diligence period of purchasing a business and have a question about net profit and projections.There is a current SBA loan that the business pays 60k a year to BUT I cannot find the payments on the P&L. How are payments to a loan accounted for? The P&L shows 14k net profit but if 60k was paid to a loan would that 60 be taken from the 14 and left with -$46,000 in net profit?

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Mark Taylor

Certified Public Accountant

Masters

928 satisfied customers
Thank you in advance; My husband and I will retire in four

Hi, and thank you in advance; My husband and I will retire in four years. Our home and all debt will be paid off. My children, mother and our only grandchild live in Michigan, while we live in Louisiana. My husband and I intend to spend 6 months a year in Michigan when we retire.My mother is aging and wants to stay in her home there. (She purchased my large victorian from me when I moved down south.) We are considering paying off her mortgage for her when we retire, and then living on one floor of the home, enabling her to continue living there.There is currently a tenant in the basement apt who has lived there 15 years and pays $600 monthly. Mom lives on the 2nd floor and we would live on the main floor (1500 square feet.) If we did this, eventually we would rent the upstairs apt for about $800 monthly. The house's monthly expenses, including taxes and maintenance, are about $800 monthly.My husband will have retirement of about $50k a year after taxes, and our expenses will be about half of that. We will only be 55, so we will be self-funding our insurance for 10 years. We will have about $200k in our retirement investment, and we would pay off her mortgage of approx $60k from that.Does this seem like a sound investment vs purchasing a Class C RV or renting an apartment every year? We would be absentee owners 6 months a year (during snowy winter months) but our daughter will be available to attend to any issues.Again, thank you for your advice!

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Lane

JD, MBA, CFP, CRPS

Doctoral Degree

17,252 satisfied customers
How to add goodwill to exisiting c corp, Selling a business

How to add goodwill to exisiting c corpJA: The Accountant will know how to help. Please tell me more, so we can help you best.Customer: Selling a business goodwill but have no cost basis on books from prior accountantJA: Is there anything else important you think the Accountant should know?Customer: journal entry

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Mark Taylor

Certified Public Accountant

Masters

928 satisfied customers
Elkhoshkhany I need to complete a worksheet based on the

For Manal ElkhoshkhanyI need to complete a worksheet based on the information given. It needs the adjusted trial balance, income statement, and balance sheet columns.

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Manal Elkhoshkhany

Foundation classes for MBA

9,232 satisfied customers
We are a technology startup with 4 shareholders. Since our

We are a technology startup with 4 shareholders. Since our balance sheet and P&L have become a mess over the years of R&D, as we start monetization, we'd like to start with a clean slate (a new company), so that we become more likely to receive venture investment.We don't just want to create a new company 100% owned by the current one because that will create double taxation in terms of potential capital gains.We can't pull money from current company and create a new one reflecting current shareholder structure either, because it will create complications since some of our shareholders are big and slow to make decision.The OldCo has $70K in the bank and we want to transfer $50K to the new one, keeping the payroll in the OldCo for the next few months.We want to solve this at the board level (two of the shareholders are at the board and we can take decision quickly). Our alternatives are:1) Create a service agreement between the two companies. OldCo pays NewCo a certain amount in regards ***** ***** its current customers. The problem, since NewCo will be cash-flow positive from day one (unlike OldCo) we will have tax liabilities. The question is, how long can we defer those taxable profits.2) OldCo gets a small percentage in the NewCo for its investment, the rest of the company has the same shareholder structure as the current one. The question how small that percentage can be so that the double taxation impact is minimized.3) OldCo gives NewCo a very flexible convertible note (e.g. converts in the next 200 years) The question is, is this feasible.Please advise regarding the three alternatives listed above, or if you have any other alternative approaches you may recommend.

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PDtax

Owner

Master's Degree

6,866 satisfied customers
This might be a stupid question, but it's one I have been

Hello, This might be a stupid question, but it's one I have been struggling with for along time. I'm a small business owner who uses freshbooks for my book keeping. My American Express and Capital one small biz card is hooked up to it, as well as my bank debit card. Ex: when I make a purchase on one of my credit cards, the transactions shows up in freshbooks, and I categorize it accordingly, Then when I pay my bill for the card I show that in my expense reports as well. My question is this. Am I duplicating the expense report by showing the same expense twice? It shows up once as the actual expense, and then again when I pay the bill as accounts payable. I just want to make sure my P&L's are correct.ThanksJarrett

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Lane

JD, MBA, CFP, CRPS

Doctoral Degree

17,252 satisfied customers
I am setting up an online accounting system to track

I am setting up an online accounting system to track expenses in (only) a corporate checking account.We receive regular cash deposits from other accounts owned by our enttity to fund this account, used for general operating expenses. Since I am not tracking those other accounts in this system, and they are not contributions from the owner nor are they owed back to the other accounts, I'm unsure of how to record them. Given it isn't owed to, or from, an owner or another account, I'm hesitant to create an account for it that considers it equity vs. an asset.

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Lane

JD, MBA, CFP, CRPS

Doctoral Degree

17,252 satisfied customers
Lev, S-Corp currently owns approx. 3.5 Mil of rental

Lev, S-Corp currently owns approx. 3.5 Mil of rental properties. 3 commercial bldgs, 1 triplex.The probate appraiser says he must appraise the buildings and appraise the value of the shares.2 of the majority shareholders died in 2015. the S-Corp was created in 1956.Value of the bldgs & repairs on the Balance sheet is $447,121 and the land value is $ 76,089.I am interested in how the taxes are to be calculated on the S-Corp. The properties will be sold in 2016 if possible.The 8 beneficiaries are curious as to their share of the inheritance. Can you explain basically the way the gains willbe calculated? I will hire a Cpa to help me with the final filing of the S-Corp return.Thank You,Fred

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Lev

Retired

Bachelor's Degree Equivalent

24,192 satisfied customers
I am a sole proprietor and have a large amount of owner

I am a sole proprietor and have a large amount of owner equity built up. My question is, when I take a draw, is it considered an expense and lessen my profit?

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Lane

JD, MBA, CFP, CRPS

Doctoral Degree

17,252 satisfied customers
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