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Do we can depend on Cash register sales instead of tax returns

Trying to buy gas service station which is recently established , not yet finished even one year also , as per the register sales it's a great business to buy for me . But still din't filed the tax returns do I can buy this business depends on cash register sale, is there any thing I have to take care before buying this business.

Thanks in advance

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Answers (2)
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The BAF Group LLC
MD

I agree with Robert Cutler. I am not an attorney, nor an accountant. As a Broker, we can provide rough estimates from Cash Registers, especially with Gas Stations or their C-Stores, as long as there is bar coding and ample other invoices and documentation to support the Cash Register tapes. However, we ALWAYS suggest that an Accountant get involved to validate what our estimates suggest, and to refine the numbers you will need to make intelligent decisions.

Cash Register tapes alone will not suffice. Knowing the Sales tells you nothing about the Profits, and you need to know Profit, in order to determine whether the Price is justified. Because the Tax Returns are not there, the burden falls on your Accountant, and that can be expensive: He/she will have to essentially create reports that take the place of the Tax Returns.

Perhaps the biggest problem is that no Bank will do a deal on this basis. On average, Banks want three (3) years of Tax Returns, in order to offer a loan for the purchase. You will either need to convince the Seller to take a note, or you will need to pay the entire Price - PLUS INVENTORY - in Cash!

A MAJOR QUESTION: Why does the Seller want to get out, with less than a year in the business???

Jan 18, 2010
Robert Cutler
Attorney
New York County, NY

I don't know if I completely understand your question, but I think what you are saying is that the register sales show good gross revenue numbers but the tax returns show little in the way of income. This could be a significant issue and I would suggest that you consult with a qualified attorney or accountant who can perform a thorough due diligence review of the business. You should never consider buying a business unless you have done adequate financial and legal due diligence.

Jan 17, 2010