Owner wont give tax fillings/ bank statement

[Anonymous]

I asked to see this info but they said their lawyer told them they dont have to give this information because it's personal info. Is this true?

[mr_soap]

Most likely the not telling the whole true.
He does not have to give you anything.

Who will by a business without knowing what he is truly buying.

WNF Revenue should not be counted twice.

If the same machines are being used make sure the coin revenue
is not double counted.

[amartlock]

They don't have to give this information to you.......and you don't have to buy the mat. Should give you cause for suspicion at the very least.

[SuperMat]

They don't have to give you anything. If they have nothing to hide it shouldn't be an issue. Personal, info unrelated to laundromat, etc. can be removed. If he claims the mat generates income that can't be prooved, or isn't reported, than it doesn't exist. It should also not be included as a factor for deriving a price for the mat. Do a utility analysis, determine what the mat is really making, and base your offer on that number. If he's hiding money it should become apparent. Remember only offer what it is worth to you. Most owners try to sell for more than a mat is actually worth.

[SmartCard]

If they are unwilling to show any of the financials, don't spend another minute with this. Drop it! Don't waste your time. Most likely it's a stinker of a store.

[DuboisLaundry]

did you ask for just the schedule C, or just ask for the last 3 years tax returns?

if you are actually interested in it, tell them they must not want to sell it if they won't allow you to confirm the earnings.

When I bought my mat, they provided the Schedule C, but not their entire 1040 form. All I needed was the schedule C anyway.

but first ask yourself if you are really interested.

[kbc747]

Sounds to me like he thinks you are a tire kicker and for what ever reason is not taking you to serious. Or maybe he is just not wanting to sell! Might want to just move on, my experience with people like this is to just move forward somewhere else, they are just to hard to deal with and in the end it just would be easier to find someone more interested in selling.

[pete f]

I asked to see this info but they said their lawyer told them they dont have to give this information because it's personal info. Is this true?

There should be wording in your sales contract you have signed about what documentation is available and the time for the owners to present it. This does not mean they will come forward with great boiks either, but gives you an out. If you have not signed a sales contract and given a deposit I would not expect an owner to show you much of anything like tax returns. Also, tax returns are only good if they operate a single business and line item it. My tax return would be useless to anyone trying to buy one of my mats, and hence, i would not give it anyway. Your water anaylisis, gas use, etc are keys to the revenue and expenses. Ask for a simple revenue reciepts book and the bills.

[Coinwash]

Pete and I see this in a different light.

Everything Pete has said is absolutely RIGHT.
But you must see the Tax returns too.(my opinion)
OK are you buying the business or just the machines?

Are you starting up a NEW S or Corp. C

Get a good lawyer & CPA who has experience at buying businesses
C_Y_A

[Ken]

The seller don't have to give you the tax info and you don't have to but the store too.
If you really want the store,you should get the water,gas,electric bills ,lease and have/pay someone check for you or do the homework yourself.You can find out the income from all the bills.
I feel you have to do some work ,not just ask the tax return,if I sell my stores today,I may not give everyone my tax info.
I made that mistake 9-10 years ago,a broker called me said someone will buy my store as long as I signed with the broker for 6 months,a lot people asked info,some even asked to speak to me for hours,I spent a lot time to give out free info,only tire kickers got all my tax info,spoke to my landlard,not a single offer.2 people even bought a few small unattendant laundromats after spoke to me,they were only looking for info,had no interested in over 4000 sqft store.

[Coinwash]

I not saying only look at the tax returns but take the time to read this.
Your not getting into this business to just count quarters and sit on the beach.

If you're a Laundromat 101-Newbie READ THIS!!
Once you get the hang of the business then things might change??

For the newbie who needs a start......cut and paste.

Each potential mat owner will need to do the necessary homework to gain the information. This offers a starting point. Good Luck.


STARTING A BUSINESS

BUSINESS PLAN OUTLINE

Cover Sheet: Name(s) of principles(s); name, address and phone # of business.

STATEMENT OF PURPOSE

TABLE OF CONTENTS


I. THE BUSINESS

A. Description of the Business
B. The Market

C. Competition and Feasibility Study

D. Location of Business

E. Management

F. Personnel

G. Application and Expected Effect of Loan or Investment

H. Summary



II. FINANCIAL DATA

A. Sources and Application of Funding
B. Capital Equipment and Furniture Lists

C. Projected Balance Sheet

D. Break-even Analysis

E. Projected Income Statements


* Three-year Summary
* Detail by Month, First Year

* Detail by Quarter, Second and Third Years

* Notes of Explanation


F. Cash Flow Projections


* Three-year Summary
* Detail by Month, First Year

* Detail by Quarter, Second and Third Years

* Notes of Explanation



G. For an Existing Business (also include the following documents)


* Profit/Loss Statements for Past Three Years
* Balance Sheets for Past Three Years

* Business Income Tax Returns for past Three Years

* Personal Income Tax Returns for Past Three Years



III. SUPPORTING DOCUMENTS

Personal resumés, job descriptions, personal financial statements, credit reports, letter of reference, letters of intent, leases, contracts, other legal documents, and anything else of relevance to the plan.



STATEMENT OF PURPOSE
A brief (less than 1 page) statement of the business plan objectives.



QUESTIONS

In General:


1. What is the purpose of this plan?
Will it be used as an:

- operating guide?
- financing proposal


2. What is the business structure (i.e., sole proprietorship, general partnership, limited partnership, C corporation, or Subchapter S corporation


3. Who is (are) the principle(s)?


4. What is to be done?


5. Why will it be successful?


For A Financing Proposal:



6. Who is asking for money?
7. How much money is being requested?

8. What is the money needed for?

9. How will the funds benefit the business?

10. How will the funds be repaid?

11. Why does the loan or investment make sense?



A. DESCRIPTION OF THE BUSINESS


GENERALLY EXPLAIN:



1. What the business is (or will be):
2. What market you intend to service, the size of the market, and your expected share;

3. Why you can service what market better than your competition;

4. Why you have chosen your particular location;

5. What management and other personnel are required and available for the operation; and

6. Why your investment or someone else's money (debt/equity) will help make your business profitable.



QUESTIONS:


1. Type of business; primarily merchandising retail, manufacturing, wholesale, or service?
2. What is the nature of the product(s) or service(s)?

3. Status of business start-up, expansion of a going concern, or take-over of an existing business?

4. Business form: sole proprietorship, partnership or corporation?

5. Who are the customers or clients?

6. Why is your business going to be profitable?

7. When will (did) your business open?

8. What hours of the day and days of the week will you be (are you) in operation?

9. What have you learned about your kind of business from outside sources (trade suppliers, banks, other business people, publications)?




NOTE: If yours is a seasonal business, or if the hours will be adjusted seasonally, make sure that the seasonality is reflected in your replies to the two previous questions.







FOR A NEW BUSINESS




10. Why will you be successful in this business?
11. What is your experience in this business?

12. Have you spoken with other people in this type of business about their experience, challenges and rewards? What were their responses?

13. What will be special about your business?

14. Have you spoken with prospective trade suppliers to find out what managerial and/or technical help they will provide?

15. Have you asked about trade credit?

16. If you will be doing and contract work, what are the terms? Reference any firm contract and include it as a supporting document.

17. Do you have letters of intent from prospective suppliers or purchasers?





FOR A TAKE-OVER:


18. When and by whom was the business founded?
19. Why is the owner selling it?

20. How did you arrive at a purchase price for the business?

21. What is the trend of sales?

22. If the business is going downhill, why? How can you turn it around?

23. How will your management make the business more profitable?





B. THE MARKET

Generally explain who needs your product or service, and why.



QUESTIONS:


1. Who exactly is your market? Describe characteristics: age, sex, profession, income, etc., of your various market segments.

2. What is the present size of the market?


3. What percent of the market will you have?


4. What is the market's growth potential?


5. As the market grows, will your share increase of decrease?


6. How are you going to satisfy the market?


7. How will you attract and keep your share of the market?


8. How can you expand your market?


9. How are you going to price your service or product, to make a fair profit, and at the same time, be competitive?


10. What price do you anticipate getting for your product or service?


11. Is the price competitive?


12. Why will someone pay you price?


13. How did you arrive at the price? Is it profitable?


14. What special advantage do you offer that may justify a higher price? (You don't necessarily have to engage in direct price competition).


15. Will you offer credit to your customers (accounts receivable)? If so, is this really necessary? Can you afford to extend credit? Can you afford bad debts?




C. COMPETITION



QUESTIONS:


1. Who are your five nearest competitors? List them by name.

2. How will your operation be better than theirs?


3. How is their business: steady? increasing? decreasing? Why?


4. How are their operations similar and dissimilar to yours?


5. What are their strengths and/or weaknesses?


6. What have you learned from watching their operations?


7. How do you plan to keep an eye on the competition in the future?




D. LOCATION OF BUSINESS


1. What kind of building do you need?

2. What are the attributes and/or salient features of your present or desired business location?


3. Why is this a desirable area?


4. Why is this a desirable building?


5. Does the community around which you intend to locate the business show enthusiasm for you and your business?


6. What are the advantages and disadvantages of the site in terms of wage rates, labor unions, and labor availability?


7. How much space do you need?


8. Do you need a long-term or short-term lease?


9. Is the building accessible by public transportation?


10. Is the building close to customers or suppliers?


11. Is free or low cost parking nearby?


12. What are the state and local taxes, laws, utilities, zoning, and variables that may affect the location of you business?


13 How do you plan to keep an eye on any demographic shift in your area?





E. MANAGEMENT



QUESTIONS:


1. What is you business background?

2. How does your background/business experience help you in this business?


3. What management experience do you have?


4. Do you have managerial experience in this type of business?


5. Do you have managerial experience acquired elsewhere-whether in totally different kinds of business, or as an offshoot of club or team membership, civic or church work, etc.?


6. What weakness do you have and how will you compensate for them, i.e., will you hire employees or pay consultants who have management abilities/expertise that you don't have?


7. What education do you have (including both formal and informal learning experience) which have bearing on your managerial abilities or knowledge of the industry?


8. Personal data: age; where you live and have lived; special abilities and interests; and reasons for going into business?


9. Are you physically suited to the job? Stamina counts.


10. Why are you going to be successful at this venture?


11. Do you have direct operational experience in this type of business?


12. Who is on the management team?


13. What are the duties of each individual on the management team?


14. Are these duties clearly defined? how?


15. Who does what? Who reports to whom? Where do final decisions get made?


16. What and how will management be paid?


17. What additional resources have you arranged to have available to help you and your business (accountant, lawyer, et al.).



NOTE: A personal financial statement must be included as a supporting document in your plan if it is a proposal for financing. Also, include your resume as a supporting document.



F. PERSONNEL



QUESTIONS:


1. What are your personnel needs now? In the near future (3years)? In five years?

2. What skills must they have?


3. Are the people you need available?


4. Will your employees be full-time or part-time?


5. Will you pay salaries or hourly wages?


6. Certain employee benefits are mandatory. Find out what they are.


7. Will you provide additional fringe benefits? If so, which ones? Have you calculated the cost of these additional fringe benefits?


8. Will you utilize overtime? If so, you may be required by law to pay time and a half, double time, and/or other extra costs.


9. Will you have to train people for both operations and management? If so, at what costs to the business?




Developed by The Howard University Small Business Development Center

[kbc747]

The seller don't have to give you the tax info and you don't have to but the store too.
If you really want the store,you should get the water,gas,electric bills ,lease and have/pay someone check for you or do the homework yourself.You can find out the income from all the bills.
I feel you have to do some work ,not just ask the tax return,if I sell my stores today,I may not give everyone my tax info.
I made that mistake 9-10 years ago,a broker called me said someone will buy my store as long as I signed with the broker for 6 months,a lot people asked info,some even asked to speak to me for hours,I spent a lot time to give out free info,only tire kickers got all my tax info,spoke to my landlard,not a single offer.2 people even bought a few small unattendant laundromats after spoke to me,they were only looking for info,had no interested in over 4000 sqft store.


Here's the deal when you are buying from me, any one of my companies, you can see any information you wish, but you drop a $5000.00 deposit(non-refundable) at my lawyers first. I have never wavered on this and this and yes if they buy they get the money back. If they don't its mine. Never had a tire kicker go past this one, plus everyone must also sign a competition agreement, that basically says you can't use any of my information to compete and I get a 10% stake(for one dollar) in any competing business you set up or buy within a 50 mile radius. As you can imagine I only speak with serious buyers and seldom have I not completed the transaction. It also states that I have to be honest, timely and accurate with all information and should my numbers be false or misrepresented in any fashion they get a full refund and released from all clauses.

[Coinwash]

LOL you drive a hard deal BUT???

;)

BUT That's $4343.67 USA

[laschmove]

Tax returns could prove useful, but how honest are all of us with the IRS? You can figure out most of what you need from the utility bills and just plain old driving by a ton and looking in the windows to see if anyone's actually there.

Check this link out: http://www.irs.gov/pub/irs-mssp/laundry.pdf

That's how the IRS would figure it all out if you were being audited and refused to divulge certian information...

[Coinwash]

Please Go to search and drop in irs

here's one

http://www.coinwash.com/mb/showthread.php?t=4219&highlight=irs

[Ken]

Here's the deal when you are buying from me, any one of my companies, you can see any information you wish, but you drop a $5000.00 deposit(non-refundable) at my lawyers first. I have never wavered on this and this and yes if they buy they get the money back. If they don't its mine. Never had a tire kicker go past this one, plus everyone must also sign a competition agreement, that basically says you can't use any of my information to compete and I get a 10% stake(for one dollar) in any competing business you set up or buy within a 50 mile radius. As you can imagine I only speak with serious buyers and seldom have I not completed the transaction. It also states that I have to be honest, timely and accurate with all information and should my numbers be false or misrepresented in any fashion they get a full refund and released from all clauses.

None refundable deposit!This is great idea,I will do it when I decide to sell my store again.We have to look this from buyer and seller's stand point.
I was not so happy after that deal with broker 9 years ago,I don't even want to speak any broker now,when they told me"we have buyers",I told them to bring cash only,cash and carry.
If you have the bills,some compapies will do the homwork for you,not very expensive.
If you feel no tax info,no deal and all the info should be free,this deal may not for you.

[Coinwash]

But Ken you want USA money not Canadian LOL
:)

have I got a deal for you LOL,LOL

[Ken]

Who care what kind money,I will take money from anyone,any where,any time of day,credit card,paypal,bidpay,cash,check,gold,sliver......I even take trade in.

[pete f]

Here's the deal when you are buying from me, any one of my companies, you can see any information you wish, but you drop a $5000.00 deposit(non-refundable) at my lawyers first. I have never wavered on this and this and yes if they buy they get the money back. If they don't its mine. Never had a tire kicker go past this one, plus everyone must also sign a competition agreement, that basically says you can't use any of my information to compete and I get a 10% stake(for one dollar) in any competing business you set up or buy within a 50 mile radius. As you can imagine I only speak with serious buyers and seldom have I not completed the transaction. It also states that I have to be honest, timely and accurate with all information and should my numbers be false or misrepresented in any fashion they get a full refund and released from all clauses.

I'm Buying KBC a beer at the next meet! Labats' Big Blue?
This is what I am talking about. I plunked down 10k to look at some somewhat vauge info recently. Seperate the kickers from the flock quickly, the non refundable may not pass to well, after all, it is proof to prove the numbers, if they come up short I want an out, however trading this info should not be done untill a decent retainer is held. The confident and non compete w/ a stake are great ideas. I also sign a clause my numbers are true, and demand anyone I buy from sign a similiar agreement.

[Kitty]

Isn't the biggest reason most business requires a looksee at the tax returns is to glance at the bottom line of the tax liabilities? Most buyers wanting to be confident the seller has been upfront with their statements of timely and accurate tax payments to the IRS?

Revenue analysis is not really generated from any of the IRS forms that a seller would provide a buyer especially like Pete notes if a seller has more than one business to add to their revenue. Buyers need to promote their time to utility statements, in store evaluatuation, customer profiles and the entire due dilligence process to determine the true revenue of a store and look at the back up a seller provides to see what equals.

Asking for tax return should be no different than the morgatge company asking for these documents when looking for a morgate when seeking a home loan, lenders want to be sure the borrower has made payemnts to the IRS and does not have any liens against them and Tax payments and liabilities are made and accurate. Laundromat buyers should be no different. Lenders are looking at revenue trends and tax liability trends not really the line items of the entire return. Laundromat buyers should be no different.

Laundromat buyers must use the utilitiy statements, store evaluation and customer profiles, equipment and water and vending analysis as well as the entire due dilligence process to determine if what the seller has discussed with him is an accurate income statement before a sale price is determined.

Kitty

[anonymous]

So you get a paper that say 1040 on it or Sch-C and it has a bunch of numbers - how do you know that it was actually filed with the IRS? Anyone can get one of those forms and write any numbers they want on it and hand it to you. If they are going to lie to you about other things why do you think the tax form they give you is the one they actually filed?

[RAM]

in laundromat business tax return not needed,
water bills for last 2 years and vend prices and # of washers and dryers

[Coinwash]

The only thing here is that we agree to disagree;)

Do what you think is right and wash clothes and make money...

Read, read and read....

[goingtoarizona]

My seller wouldn't even state (even verbally) his income, but I got utilities, and that "silly" book about making a fortune in laundries is even quoted in the bibliography of the IRS laundromat audit manual (available online)(I think that book has GREAT info..), I drove by at all hours of the day, finally the seller showed me one ace (although I suggest you still watch out, your seller may be trying to sell you a TURD, never know) he told me only to deposit enough to cover the expenses...well, all I know is that I'm a happy laundromat owner. I did my homework, and it turned out ok, but I didn't sleep a wink the day before close of escrow, I had nightmares all night...LOL

[CharlieS]

This is a tough one.

A tax return may or may not be useful. In my case, I have multiple mats added together, so it wouldn't help if I sold one mat.

If a single mat is shown on a schedule C, it would be PART of the info you need for due diligence. I would never share this unless I had a subtantial downpayment and contract in hand. Yes, I would expect the contract to be contigent upon verification of previously provided numbers through due diligence of the purchaser. The downpayment would be completely refundable if I provided inaccurate information.

Personally, I prefer to take high road. Give Caesar his due. Report all of your income. Yes, I hear that its common to skim, but my numbers, when and if I sell, will be completely valid, accurate, and verifiable. I do keep very accurate books on each mat, even though the numbers are combined on the tax return.

If concerned about Fraud, (and who isn't), the old adage, Trust but Verify, comes into play.

Look at the total picture. Do the utilities make sense relative to what you're being told? What about general customer levels. Bank statements might support the numbers. The IRS program is no longer in use, because it can be inaccurate and requires significant assumptions that may or may not be valid.

How do you know if they make sense? Whenever any mat comes on the market, take a look at it. Get the numbers and keep them for later comparison purposes. The more knowledgeable you become, the easier it is to spot the gold or the lead.

Charlie

Charlie

[Coinwash]

This is a tough one.

A tax return may or may not be useful. In my case, I have multiple mats added together, so it wouldn't help if I sold one mat.

If a single mat is shown on a schedule C, it would be PART of the info you need for due diligence. I would never share this unless I had a subtantial downpayment and contract in hand. Yes, I would expect the contract to be contigent upon verification of previously provided numbers through due diligence of the purchaser. The downpayment would be completely refundable if I provided inaccurate information.

Personally, I prefer to take high road. Give Caesar his due. Report all of your income. Yes, I hear that its common to skim, but my numbers, when and if I sell, will be completely valid, accurate, and verifiable. I do keep very accurate books on each mat, even though the numbers are combined on the tax return.

If concerned about Fraud, (and who isn't), the old adage, Trust but Verify, comes into play.

Look at the total picture. Do the utilities make sense relative to what you're being told? What about general customer levels. Bank statements might support the numbers. The IRS program is no longer in use, because it can be inaccurate and requires significant assumptions that may or may not be valid.

How do you know if they make sense? Whenever any mat comes on the market, take a look at it. Get the numbers and keep them for later comparison purposes. The more knowledgeable you become, the easier it is to spot the gold or the lead.



Charlie

Thank you Charlie

"Look at the total picture"
"The more knowledgeable you become, the easier it is to spot the gold or the lead."