Business Valuation Mistakes

Business Valuation Mistakes that Could Cost You the Deal

Every second employee thinks about opening their own business, but a little more than 20% decide on real actions. Moreover, half of those who started in business lose interest in their own business as soon as they encounter the first difficulties. We have counted ten typical mistakes of novice entrepreneurs that prevent your dreams and ambitions from being realized.

Entrepreneurs do not sign contracts when buying or selling goods or services

In the beginning, everyone is very busy organizing a business and obsessed with sales and customers, but there comes the point when someone wants to deceive an entrepreneur. And since everything is done “on parole”, it will not be any problem for dishonest partners to carry it out.

Refusal to register your brand or trademark

Everything here is quite banal: an entrepreneur develops a business and, after a while, decides to register a trademark and finds out that it has already been registered. Or it happens differently: an entrepreneur receives a claim for illegal use of a trademark, which another businessman registers. As a result, an entrepreneur who has invested his funds in a brand must rename his business.

Lack of public offers (applies to online stores)

The presence of a public offer on the website of the online store means that the sale of goods and the purchase by the buyer take place according to the rules of the store, and therefore in conflict situations, it is much easier for the parties to find a compromise since the client must familiarize himself with the offer before buying the goods. However, this simple solution is neglected by many at the beginning, and only after admitting that the business is not working efficiently due to customer disputes does it decide to implement the offer.

Lack of tax optimization

Often a new business is created like this: a person who starts a company finds out information about registering a business on the Internet and comes to a lawyer with the specific task of creating an LLC or PE. The lawyer, in turn, performs the task. However, as my practice shows, this is an erroneous procedure from the very beginning. No matter what anyone says, each business needs to be considered individually; there is no standard rule for everyone.

The law is standard for everyone, but business is a constructor, and it is important to draw it up correctly. In particular, I advise you to calculate the cost of taxes for various work models initially. Thus, some businesses can save up to 30% of monthly profits on taxes.

Lack of primary documents

By law, each transaction for the purchase or sale of goods or services must be documented; that is, the entrepreneur must issue an invoice, an act of acceptance and transfer of goods or services, or an invoice. These documents are needed to confirm the purchase or sale of goods if the tax asks. But in practice, primary documents are drawn up with errors, partially or drawn up, but the originals are lost over time. Therefore, the preparation of primary documents must be carefully monitored; otherwise, the tax authority may fine the entrepreneur.

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