Newbie with questions

[funnyguy]

So I am looking to buy a business, however I having questions as expected. My questions are:

1) What is the best route to get financing for a first time buyer? I don't know what direction would be easiest.
2) Are businesses allowed to run my background and credit check without my knowledge and vice versa? Does it vary by state?
3) Am I allowed to view there federal tax returns if no P&L or balance sheets are present?

[funnyguy]

Wow nothing?

[dslackman]

So I am looking to buy a business, however I having questions as expected. My questions are:

1) What is the best route to get financing for a first time buyer? I don't know what direction would be easiest.
2) Are businesses allowed to run my background and credit check without my knowledge and vice versa? Does it vary by state?
3) Am I allowed to view there federal tax returns if no P&L or balance sheets are present?

1. All are tough... banks, private investors, etc
2. Not sure, but I always get permission first
3. This is negotiable between you and the seller, but they should have basic accounting stmts. If they don't, even with a tax return, how will you know the status of the business?

[SparkDesign]

rather than buying a business, why not start on yourself ?

[creditnet]

So I am looking to buy a business, however I having questions as expected. My questions are:

1) What is the best route to get financing for a first time buyer? I don't know what direction would be easiest.
2) Are businesses allowed to run my background and credit check without my knowledge and vice versa? Does it vary by state?
3) Am I allowed to view there federal tax returns if no P&L or balance sheets are present?

1) It's difficult even for existing profitable businesses to get financing from banks. IF you have a good relationship with a bank (i.e. you have tons of cash sitting in a deposit account) and have great personal credit (even this doesn't seem to matter as much), you might be able to get financing dependent based on previous year financials of the business.

2) Businesses are not allowed to run a credit check on you without your permission. Oftentimes, however, you give permission without really realizing it (i.e. in the signing of forms, or by applying for an account). Same goes for you running someone's background or credit check. The FCRA (Fair Credit Reporting Act) states a severe penalty of up to 2 years imprisonment if a consumer's information has been obtained under "false pretenses". So make sure you get a signature authorization and keep it on record!

3) You're allowed to see whatever the business is willing to show you! All businesses should have accounting records of some sort and if they use Quickbooks, they'll be able to run P&L and Balance Sheet statements for you with no problem. Now, just because they use accounting software doesn't mean they've accounted for everything correctly, so be sure to ask for detailed (as opposed to summary) reports.

[chuff1026]

the first 2 questions were answered...just for number 3...

3. The business owner selling the business will show you what he wants. Most times there will be as much disclosure as possible so that the buyer will feel comfortable. Before buying a business, everyone should pull and Dun and Bradstreet credit file on the business as well as an equifax business credit file. This will give you some insight on if the company has been paying their bills on time as well as if there are any liens or law suits against the company.

Just a note on financing..right now its really tough...i can get some financing building business credit as that is what I do for a living..

[Shane Farrell]

The more the owner can show you the better. Having bought 5 restaurants in the past and selling them as well you should ask to see the State Sales Tax payments. This will tell you the income/sales he is claiming.

Any P/L statements are pretty much BS. If he isn't claiming it on acutal tax returns, it doesn't exist. Not from a buying price point anyways.

Thanks, Shane

[Financial-Post]

ask for screnshoots!