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Raymond C. Horton, Sr ChFC is a member of the Ark-La-Tex chapter of the Financial Planning Association, whose members contribute to this column weekly. If you have questions or topics you would like to see addressed in this space, send inquiries by mail to Financial Fundamentals c/o The Times, Money/Business, 222 Lake St.,mulberry handbags outlet, Shreveport LA 71101 or by email to shreveportmoney@gannett.com. / Handout
Business valuation is mostly art; it is not an exact science. No one number will exactly reflect the value of any given business or other entity. Ultimately, the value is how much it will bring in an arrangement between willing sellers and buyers. An Indian Head nickel coin minted in 1905 recently brought $3.2 million in auction. Therefore,mulberry factory shop bicester, its value is pegged at the purchase price. In my experience, the business owner usually knows closely the true value of the business. A third-party valuation often validates that thought to some degree and can add credibility to the process.
Why is this important? If you place a value of $3 per share on your business and you die, the IRS may value it at $9 per share and the tax court may decide upon $6 per share. Without a good valuation of your own, your estate is at the mercy of the court. In this example, your value for tax purposes becomes 200 percent of your estimated value.
Financial advisors make no claim to be certified appraisers, accountants or attorneys. Financial advisors give no advice in those fields. In the process of their work as financial advisors, they utilize the work product of those professions, and, indeed,mulberry sale, the actual professionals to provide input, content and validation to those elements of their own work product. They often are the initiator of the process and usually are the point-person or coordinator working with the client and their other professional advisors. Expectations of any absolutism in their work should be set aside. This work gives the business owner valuable content to interface with other plans,mulberry sale shop, actions and decisions.
Some of the tax reasons could include estate tax, gifting, charitable contributions, S Corp gain and purchase price. Non-tax reasons could include sale of the business, a merger, buy-sell agreements,mulberry outlet store york 7 Red Cross workers res, regulatory valuations or litigation support. There usually is a certain confidence acquired with knowing an unbiased opinion of the business value.
A valuation report is created without pre-conceived thoughts of using the information for purposes of product sales. However,mulberry bags outlet reviews The Cleveland kidnapp, the findings do enable one possibly to exercise better judgment in those affiliated processes, such as succession planning, key-person retention, employee benefits and estate planning,mulberry outlet new york, or to bolster banking relationships.
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Financial advisors use your own financial statements, which may include any independent appraisals of real estate and equipment values and your actual federal tax returns to develop their value estimates. Webster's dictionary defines value as: A fair return or equivalent in goods, services or money for something exchanged; the monetary worth of something; marketable price; relative worth, utility or importance; something intrinsically valuable or desirable.
One valuation doesnt necessarily fit all purposes. You could want to utilize a lower value for one purpose and a higher value for another.Said values are used as a refined starting place to interface with business decisions. Several generally acceptable methods of valuations could include the asset value, income capitalization and excess earnings. The ultimate fair market value could be a derivative of the previous methods of valuation. There is no guarantee of acceptance of the stated values by the IRS. However, the reported findings could possibly serve your purposes.
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Raymond C. Horton, Sr ChFC is a member of the Ark-La-Tex chapter of the Financial Planning Association, whose members contribute to this column weekly. If you have questions or topics you would like to see addressed in this space, send inquiries by mail to Financial Fundamentals c/o The Times, Money/Business,york mulberry outlet, 222 Lake St., Shreveport LA 71101 or by email to shreveportmoney@gannett.com.
Financial Fundamentals: How should you value your business?
Business valuation is mostly art; it is not an exact science. No one number will exactly reflect the value of any given business or other entity. Ultimately, the value is how much it will bring in
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