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Question on how I am making my money in relationship to if I want to sell.

Here goes: I own a restaurant in Pittsburgh and have so for almost three years (the place has been there for 10 years. Last year I found out I could get paid back for the money I spent to buy the restaurant (and paid back for initial investments into the business) instead of taking a large salary. If the corporation owes me money then I figure I shouldn't have to pay large income taxes. For example, so far this year I cleared 6513 on my official salary. I also took back from the company 27800 in money it owes me for a total of 34313 (first five months of the year,CLEAR not gross) for a net return of 6862.60 per month. (Continued on first post in this thread.)

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Answers (9)
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Jan 14, 2017
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A few weeks later and here is the concensus: For purposes of getting a loan from a bank especially one backed by the SBA, the money CANNOT be used as a way for somebody to get a loan based on those numbers unles the down payment was very substantial. I have the money listed as a liability not as profit so I am out of luck. BUT---- the money is being shown that it is there so it should be able to be easy to show someone who has home equity, an investor, a 401k plan or just good old fashionesd cash that I have a good little cash cow-- especially with my "other benefits."

Special thanks to Don Barrick and Michelle Orr for help on this matter.

Jun 27, 2009
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The BAF Group LLC

John, let's talk at (410) 715-0700, or e-mail me at

Jun 3, 2009
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I talked it over with the biggest broker in the area that does restaurants and she said it couldn't be considered as income for purposes. Her accountant told her. I would like to get a response from one of the lenders here if one could please respond.
Don, any other thoughts on the subject?

Jun 3, 2009
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The BAF Group LLC

Absolutely! YTD Financials will usually not include how the "Profits" are to be doled out or assigned in order to legally avoid paying Taxes, and your Accountant's statements would be the best source of testimoney. Normally, particularly in larger deals, the Buyer will ask for both the P&Ls and Balance Statements, in addition to the Tax Returns. This is because the P&Ls show a truer picture of Cash Flow than the Tax Returns, for that specific reason; and the Balance Sheets show where the money needs to go, as well as a record of historical indebtedness that supports your payments for Stockholders Loans and such.

Jun 1, 2009
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Don, my accountant says that she has listed under "loan to shareholders" on my taxes. What about the money that I got this year where I don't have a tax return yet? Is my bank statements and someting from a CPA going to be enough proof of income?

Jun 1, 2009
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The BAF Group LLC

John, as long as you are getting the money paid in a verifiable manner - whether it is Salary, Loan Reimbursements, Profit Sharing - it should not matter to the Bank. The key is whether it is verifiable. All businesses are subject to some level of "adjusted Cash Flow" computations. Things that are commonly added back into that Cash Flow are "excess" Owner Income, Depreciation, Interest Expense, Charitable Donations and one-time expenditures. The only difficulty with Resraurants is normally found in the amount many Owners put in their pockets without claiming it on their Tax Returns, in any way.

There are definitely Banks that will not finance Restaurants, frequently because of the Price, in the face of a business that has claimed no Cash Flow on the Tax Returns. But there is a difference between HIDING money and legitimately moving the Expenses in a way that reduces Taxes Due. In your situation, if I have understood your position, I do not believe you should have a huge problem. If you want to discuss this further, call me.

May 31, 2009
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Now I am now on pace to a verified NET of 82344 for 2009. The problem is that since I am not getting this money from a W-2 I fear that banks and other lenders won't finance this business for a buyer even though it is easily verifiable through my bank records and a back up from my CPA. Is financing available for this business or is my stubborn resolve not to pay income tax when I don't have to going to prevent me from selling, if I choose? There are other monetary benefits I receive that I am not including: cell phone reimbursement,etc. and "other" benefits.

May 31, 2009

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