Choose your country

Or view all businesses for sale


Small-business accounting when buying a business

Abacus black and white mathematics counting numbers

Charting its fortunes from the day it began trading, a business-for-sale's accounts are central to the process of buying a business.

Having access to the most recent 3-5 years trading figures is imperative for the business buyer. Careful scrutiny, with the professional help of an accountant, is important if you're to choose the right business and pay a fair price.

When you're appraising the accounts of a business for sale, you may also have one eye on how to improve those accounts post-sale too - especially if you've paid a knockdown price on account of a messy balance sheet. commissioned a top business-transfer agent to write some tips on checking the accounts of a business for sale, as well as a leading accountant for some advice on how to improve and manage those accounts once the sale has gone through.

Due diligence: checking the accounts

The following tips are formulated by Derek Burgoyne FNAEA FICBA, a business-sales agent for Cornerstone Business Agents - specialists in the sale of Scottish businesses:

Whilst it's always a good idea for prospective business buyers to seek independent advice when assessing a business opportunity, a few quick basics should be considered when first looking at a business's accounts:

  • Checking the turnover and comparing it with previous years' figures to assess the way the business is going is a good place to start. Then check the gross profit percentage to ensure it is line with similar businesses. Any anomalies should be investigated.
  • Wages are often the largest overhead. Get to grips with the wages and whether they are higher or lower than you would expect for this type of business.
  • Then examine the rest of the overheads, remove personal costs such as depreciation and finance and adjust the remaining cost to reflect the way you feel a competent owner/manager would run the business.
  • Net profit can then be adjusted to give you a good idea of the business's true profitability.

Managing accounts once the sales goes through

The following tips come courtesy of Alan Drummond, MD of Douglas Home & Co, based in Kelso, the Scottish borders. Alan has a broad experience from dealing with city-based clients to those in the agricultural sector:

You've bought the business and now you need to get to grips with the accounts. Here are some pointers:

Keep it simple but effective: if the system is complicated, be prepared to start again with a completely new one. Always use a tried and tested system and avoid any "bespoke" options until you understand the business properly.

There are no shortcuts: 

  • Check that the bank, debtors and creditors match the list of who owes you, who you owe and the money at the bank on a monthly basis.
  • Check VAT rates on the system and that the best method is used (eg, a flat rate)
  • Go through each expense category and decide if they are sensible and sufficiently detailed.

Get the timing right: Check supplier payment terms, customer's credit terms and the timing of when invoices are raised each month and follow up for settlement.

Leave no stone unturned: Review how cars and fuel are treated. Make sure all expenses are claimed and that all tax relief available is claimed on the assets (including embedded fixture and fittings)!

Subscribe to our email updates

Sign up to receive the latest advice, most popular businesses, special offers and much more.


I'm interested in is committed to protecting your privacy. We will use the information you provide on this form to send you marketing emails . Find out more about what we do with your information in our Privacy Policy.
Marketing Emails: You will receive newsletters, advice and offers about buying and selling businesses and franchises. We will also send you information about events relating to buying, selling or running a business.

Are you a Business Owner?

Set up your Private Seller Account and create your listing today

Get Started Here

Are you a Business Broker?

Set up your BrokerWeb Account and list multiple businesses

Get Started Here