Place A Business For Sale Posting 
Place A Business Wanted To Buy Posting
Share This Info:
Discussions > Should Sellers Of Small Businesses Give Potential Buyers Their Tax Returns?
Should Sellers Of Small Businesses Give Potential Buyers Their Tax Returns?
See All Discussions • See All Contributors • All New Discussions & Comments
Comments & Replies: 2 Views: 4478
Posted By: Joe Ranieri 
Should small business owners/sellers give potential buyers direct access to their tax returns (and potentially to copies direct from the IRS) either before or during the due diligence process? Several business brokers and advisors discuss this topic on BizBen Discussions.
Topics: Buying A Business, Due Diligence, Selling A Business Tags: buying a business, due diligence, selling a business
Should small business owners/sellers give potential buyers direct access to their tax returns (and potentially to copies direct from the IRS) either before or during the due diligence process? Several business brokers and advisors discuss this topic on BizBen Discussions.
Topics: Buying A Business, Due Diligence, Selling A Business Tags: buying a business, due diligence, selling a business
As a seller, with regards to due diligence, should I give a buyer "third party authorization" to inspect my tax returns directly from the Internal Revenue Service?
This issue recently came up in a transaction that I was working on. I was selling a mini-mart to a buyer who had been an accountant for 20 years, and he did his due diligence by way of visual observation, register tape, sales tax filings, and was about ready to open escrow when he demanded the seller give him authorization to receive the tax returns directly from the IRS. The buyer was convinced that the tax returns could be fraudulent or doctored from the ones that were officially filed with the IRS. The seller created a counter offer that they would not authorize the buyer to pull tax returns directly from a government agency. The buyer balked, and the deal died.
It's been my general rule that a seller should give as much information about the business as possible during the due diligence period, and a buyer should be completely satisfied. It has been my experience that the majority of buyers do not want "third party authorization" for tax returns directly from the IRS, and are usually satisfied with inspecting the seller's copies, but if the buyer does not feel comfortable and not proceed because of it then that is their choice.
This issue recently came up in a transaction that I was working on. I was selling a mini-mart to a buyer who had been an accountant for 20 years, and he did his due diligence by way of visual observation, register tape, sales tax filings, and was about ready to open escrow when he demanded the seller give him authorization to receive the tax returns directly from the IRS. The buyer was convinced that the tax returns could be fraudulent or doctored from the ones that were officially filed with the IRS. The seller created a counter offer that they would not authorize the buyer to pull tax returns directly from a government agency. The buyer balked, and the deal died.
It's been my general rule that a seller should give as much information about the business as possible during the due diligence period, and a buyer should be completely satisfied. It has been my experience that the majority of buyers do not want "third party authorization" for tax returns directly from the IRS, and are usually satisfied with inspecting the seller's copies, but if the buyer does not feel comfortable and not proceed because of it then that is their choice.
Contributor: Timothy Cunha JD: Business Broker, SF Bay Area
After a contract is in place and due diligence has begun, tax returns are fair game. And, the prudent buyer receives them directly from the IRS with seller approval. A seller who refuses to allow independent verification of his tax returns, does so at his peril -- the buyer quite rightly should be suspicious and may very justifiably kill the deal.
| Helpful Resources To Assist In Selling And Buying California Businesses |
 |
Helen Yoo: Escrow & Bulk Sale Services - Southern California New Century Escrow, Inc. is a fully licensed & bonded independent escrow company. Over 20 years combined experience in handling bulk escrow transactions. Multi-lingual staff that speaks your language, including Korean, Chinese, Vietnamese. Call Helen Yoo direct at 626-890-1151. |
 |
Hasan Abdullah, Esq. E-2, Immigration Legal Assistance I have over 10 years experience with E-2's and immigration issues. E-2's approved for as little as $10,000. Let me assist you with E-2 visa strategies when buying and selling a small to mid-sized California business. Mention BizBen.com for a FREE consultation when phoning me direct at 510-500-1155. |
 |
Mark Chatow, Esq.: Legal Services For Buying, Selling Businesses Mark has a broad range of small business purchase & sale experience from analyzing potential acquisition targets to successfully guiding buyers and sellers through the purchase & sale of small businesses. Mark can assist with contracts, negotiations, legal matters, etc. Reach Mark at 949-478-8393. |
 |
Diane Boudreau-Tschetter: Escrow And Bulk Sale Services California Business Escrow, Inc. is a full service independent escrow company serving all of California and has expertise in a wide range of escrows. Our team prides itself on providing an exceptional escrow experience. For more info phone Diane Boudreau-Tschetter at 888-383-3331 or 209-838-1100. |
 |
Willard Michlin, CPA, Certified Fraud Examiner, Due Diligence Services Willard Michlin, CPA #106752, offers buyers step by step training & assistance in doing Due Diligence Services when they are thinking of making an offer, or are in process of investigating a business purchase. He helps to determine the actual net profit even when there is cash. Call 805-428-2063. |
 |
George Lanza, Business Broker, At Plethora Business Sales Plethora Businesses, a division of A Premier In Services, Inc., is a Business Intermediary Consulting Firm headquartered in Orange, California. Plethora specializes in the listing and sale of small and medium sized private businesses. |
 |
William Park, Business Broker - Southern California Highest Volume Broker in California, Simply Check our HUNDREDS of Listings! Over 25 Associates, Speaking Dozen Languages, Helping Buyers and Sellers of Small Business since 1982, Centrally Located between Los Angeles and Orange Counties, while Riverside & San Bernardino Counties are Very Accessible. |
 |
Joanne Weber, Broker - Preschool Specialist - Southern California The Ryan Craig Company is in its 35th year as the recognized expert in Southern California, dealing exclusively in the sale of preschools, Montessori schools, day care centers, and private schools. Our extensive list of references speaks for itself. Phone Joanne at 818-760-3684 for more info. |
| Related Articles, Events, Blog Posts, Discussions, Videos, Interviews |
 |
Podcast: E-2 Visas: Buying & Selling CA Businesses: Attorney Explains All
Hasan Abdullah, Esq. is a Specialist In E-2 Visas and Immigration Assistance For Buyers & Sellers in California. During this Podcast he answer questions on various issues regarding E-2's - all buyers, sellers, brokers, & advisors should listen to this BizBen Podcast on this important topic! |
 |
Purchase A Business With Limited Or No Cash - Financing Tips For Buyers
Purchasing a business with no money down can be difficult, but not impossible. Financing a business purchase or down payment can often be accomplished with these strategies from Peter Siegel, MBA (Business Purchase Financing Expert, ProBuy & ProSell Program Advisor with BizBen) at 866-270-6278. |
 |
Getting An SBA Loan To Buy A Small Business: Dispelling Some Major Myths
When seeking SBA loan financing many potential business buyers have wrong information about the process of securing the best financing to buy a business. Peter Siegel, MBA (at 866-270-6278) a business purchase financing expert delves into the myths and facts regarding SBA loan financing. |
 |
Business Purchase Financing Expert Gives Tips On Proving Cash Flow
What are the actual "provable" adjusted net earnings (cash flow) of a small to mid-sized business being purchased? Buyers need to look carefully at all financial info for the "real" adjusted net income or cash flow. Peter Siegel, MBA (business purchase financing expert) at 866-270-6278 explains. |
 |
Thinking About Selling A Small Business? Know These 8 Factors That Matter
The likelihood of selling a business is often determined by external factors in the marketplace. Here are eight influences on how easy, or difficult it might be when selling a small California business. Peter Siegel at 866-270-6278 (BizBen ProSell Program) explains these factors for owner/sellers. |
 |
Live Podcast: How Not To Get Sued When Selling Or Buying A Business - 12/12
On Wednesday Dec 12th at 4PM, Mark Chatow, Esq. discusses how not to get sued and protect yourself when selling or buying a business. All business buyers, business owner/sellers, business brokers and agents should listen to this LIVE Podcast. Stay out of legal troubles by listening to this Pocast! |
 |
Broker Explains Allocation Of The Purchase Price When Selling A Business
There are a handful of key asset categories in allocating or breaking down the purchase price allocation of a California business sale. Allocation is required to complete the transaction. In this blog post Lee Petsas (Orange County Business Broker) at 714-363-0440 covers asset allocation classes. |
 |
Who Really Represents The Business Buyer In A Deal? Does Dual Agency Work?
Who really represents the buyer? The selling broker or agent through dual agency? Many brokers and agents weigh in on this Discussion on BizBen. Bottom line is all business buyers need to know who really represents them and has their best interest at heart when seeking and negotiating on deals. |
| See All News, Tips And Events |
Topics:
Business BrokerageBusiness OpportunitiesBusiness FinancingBusiness ValuationBuying A BusinessDeal StructuresDue DiligenceEscrow Closing IssuesFranchisingLegal IssuesLegislative IssuesMergers AcquisitionsNon DisclosureSelling A BusinessRecent Discussions:
Recent Contributors:
Popular Discussions:
Popular Contributors:
Tags:
Absentee RunAdjusted Net IncomeAdvertisingBroker CooperationBusiness BrokersBusiness ValuationBuyer RepresentationBuying A BusinessDeal StructuresDue DiligenceEscrow Bulk SalesEventsFinancingFor Sale By OwnerFranchisingHome BasedInventoryLandlordsLegal IssuesLegislationLiquor LicenseNon DisclosuresNon SBA LoansOpen ListingsPocket ListingsSBA LoansSeller NotesSelling A Business
500 New & Refreshed Detailed Postings Daily