Avoid Problems when You Buy or Sell Websites
Reprinted with permission of VotanWeb.com
The biggest thing a seller can do to make certain that a transaction proceeds smoothly is to adequately prepare the website’s financial statements. The owner should prepare a complete set of financial documents, going back two years at least, that accurately and fully represents the website’s current business condition.
Website owners have a choice here: those financial statements can be audited or simply reviewed by an accounting firm; or they can be compiled by the website owner. But audited statements offer sellers the best hope of speeding a deal along. With audited numbers, the buyer knows that your financials are accurate and doesn't have to waste time recalculating them.
Closings can also grind to a halt when a website seller doesn't prepare interim financial reports. These reports don't have to be audited, but they do have to give the buyer a sense of the website’s financial condition. If the website has warts, there's no point trying to hide them. A buyer will discover them during due diligence, which could send you back to square one.
Another cause for concern is when the website seller enters negotiations without having worked out the bottom line, the actual after-tax compensation he or she wants. That's a problem because different deals - and deal structures - can have different tax implications. Deals can fall apart when the payment to Uncle Sam is calculated too close to closing and the selling price no longer looks adequate to the website seller.
Of course, buyers can also create problems for themselves.
The growth of online business has grown enormously over the years. Cliptomania is a family operated and owned small e-business that primarily sells clip on earrings (Brown, DeHayes, Hoffer, Martin, & Perkins, 2012, p. 308). Cliptomania early developments were very modest, and as such the company experienced copious strategic dilemmas. An initial strategic dilemma that the company encountered when establishing and building their new e-business undertaking was to create a website for the business operations and essentially to have it fully operable. The owners, Jim and Candy elected to hire a vendor to host the website and additionally utilize the IT systems resources of the vendor to sustain their business. At the very beginning they exploited the offerings of the Yahoo Store. However, continuing down this avenue of using the services of the Yahoo Store inevitably became too costly. By using the services and business offerings of a vendor made it convenient and effortless for Jim and Candy to start their e-business store. Unfortunately the couple did not have much in the way of professional help, and so they had to create and put together the website by themselves. Additionally they also had to deal with establishing their online credibility as many customers preferred to call in their orders just to talk with a real person before being comfortable enough to place their orders via the webpage.
The Securities and Exchange Commission requires that publicly owned businesses provide annual reports, which are available to the public. Many different people use annual reports, to make informed business decisions. Management from the company uses the information to determine a number of items. Some of these items are the profitability of the company, the inventory turnover rate, and the accounts receivables rate. Creditors use the annual report to determine how well a company can satisfy its current liabilities, as well as, how the company is doing in the aspect of long tem survival. Another group of people who use the annual reports furnished by companies are the investors, who can purchase shares of stock from the publicly company. Annual reports are very important to these people, because they are an over all picture to help them determine the over all stability and reliability of the company’s financial outlook. These annual reports are important because they do not only contain the financial statements of the company, but there is a management ‘s note to discuss reasons for any unexpected numbers, and an auditor’s report, from an independent accounting firm, who either agrees or disagrees with the financial numbers. Market reporter Matt Krant said, “Ignoring these reports is akin to driving down the freeway blindfolded.”
Companies doing business on the Web must be certain of their ability to manage the liabilities that can emerge as a result of today's online business environment. This environment includes laws and ethical factors that are sometimes different from those in the brick and mortar setting. The online environment often forms a network of customers who can have considerable levels of communication with each other. Online businesses that break the law or violate ethical standards, therefore, can face swift and harsh reactions from customers and other stakeholders who will quickly learn of the businesses' unscrupulous online behaviors. Online customers also have much more interactive and complex relationships with online businesses than they do with traditional companies. This is because Internet technologies enable companies to build Web sites that can be customized to meet the specific needs of their B2B or B2C customers (Schneider, 2004). Online businesses can use this property of the online environment to manage the legal and ethical requirements of both business and consumer clientele.
This is because for example, if you buy a designer watch on an e-commerce site, you don’t know 100% if it’s original or not, which is why some customers don’t trust e-commerce sites. Also some customers have trust issues with e-commerce businesses because they think their personal details are not private. Customers also have issues when e-commerce sites personalise their usage of sites, by recommended other products, centred on what they purchased or searched for before.
As technology progresses it can truly change how a business operates in terms of accounting and financial reporting. Online software has become a widely used system by many businesses around the globe. Financial reporting is essential to any business especially when seeking for potential investors or stakeholders. The reason being is because a financial report contains all of the records of how a business is performing financial wise. Likewise there are purposes of securities regulations and the main one is to disclose any schemes.
Cohabitation, over the last two decades has gone from being a relatively uncommon social phenomenon to a commonplace one and has achieved this prominence quite quickly. A few sets of numbers convey both the change and its rapidity. The percentage of marriages preceded by cohabitation rose from about 10% for those marrying between 1965 and 1974 to over 50% for those marrying between 1990 and 1994 (Bumpass and Lu 1999, Bumpass & Sweet 1989); the percentage is even higher for remarriages. Secondly, the percentage of women in their late 30s who report having cohabited at least once rose from 30% in 1987 to 48% in 1995. Given a mere eight year tome window, this is a striking increase. Finally, the proportion of all first unions (including both marriages and cohabitation) that begin as cohabitations rose from 46% for unions formed between 1980 and 1984 to almost 60% for those formed between 1990 and 1994 (Bumpass and Lu 1999).
Human Resource Director, Ashley Wall, with 10 years of experience at Treadway Tire Company, has decided to conduct a thorough analysis of the line foremen job dissatisfaction problem within a short frame of time and devise a plan of action to correct it. Using an action research approach to understand the problem from different viewpoints, Ashley is determined to solve the problem as soon as possible by uncovering key issues at the plant using formal and informal documentation. According to Patton (2002), “to have an understanding of the nature of the problem by those involved will allow human beings to more effectively control their environment” (p. 217). This is to say that as a participant in the problem being studied, personal insights and experiences can be interjected with a sense of urgency to get any problem under control. As it relates to the Treadway Tire Plant, this essay will discuss: (1) Any key issues with shortcomings; (2) Recommendations for a possible solution; and (3) Data sources and collection to better understand the nature of the job dissatisfaction problem.
Financial and Managerial accounting are used for making sound financial decisions about an organization. They provide information of past quantitative financial activities and are useful in making future economic decisions. (Albrecht, Stice, Stice, & Skousen, 2002) The same financial data is used to derive reports for each accounting process yet they differ in some ways. Financial accounting primarily provides external reports for external users such as stock holders, creditors, regulating authority and others. (Garrison, Noreen, & Brewer, 2010) On the other hand Managerial accounting is concern with providing information that deals with the internal viability of the organization and is tailored to meet the needs of an individual organization. (Albrecht, Stice, Stice, & Skousen, 2002)
According to the conceptual framework, the potential users of financial statements are investors, creditors, suppliers, employees, customers, governments and agencies, and the general public (Financial Accounting Standards Board, 2006). The primary users are investors, creditors, and those who advise them. It goes on to define the criteria that make up each potential user, as well as, the limitations of financial reporting. The FASB explicitly states that financial reporting is “but one source of information needed by those who make investment, credit, and similar resource allocation decisions. Users also need to consider pertinent information from other sources, and be aware of the characteristics and limitations of the information in them” (Financial Accounting Standards Board, 2006). With this in mind, it is still particularly difficult to determine whom the financials should be catered towards and what level of prudence is necessary for quality judgment.
Just like before you buy, as you buy has three steps that we learn from Siegel and Yacht. They start off...
...e financial reports and statements are correct. This auditing will be conducted by auditing department of the organization, even may be done by an independent auditor who is not part of the organization, and sometimes public officials are elected. In case of unmatched consequences the organization need to give explanation on the misrepresentation of wrong statements. Auditors purpose is then to ensure that the misrepresentations are corrected, then maintain accurate, reliable financial documents and statements.
Throughout the last decade, about 50 percent of transactions never go through, as a result of the buyer and seller not using the correct legality and tax forms. (Parker). If business owners were to sell their businesses by themselves, they would need help with the valuation of the legality forms. For example, there are about 34 documents required for the course
Internet auction fraud is the most dangerous online crime but receives no attention from people. It does cause the victims to suffer losses but most of them fail to report the crime to the authorities. The internet auction fraud is a serious crime when it was reported to be the number one online scam by the U.S Federal Trade Commission in 1997. In 2001, 70% of fraud cases were reported to Internet Fraud Watch. When people do not know the danger of its existence, no precautions to avoid it are taken. Some of the concerned victims reported the fraud to the auction house. But it was shocking that even the auction house themselves do not realize the bad impacts of this crime. Mostly, it was because of the reliance of the auction house on the auction participants to take their own precautions even though they had no knowledge about the auction fraud. Most of the victims decided to stay silent and not reporting the crime to the authority because of some reasons.
There are notably five main gaps that exist between the seller and the buyer. They are space gap, time gap, information gap, ownership and value gap.
Owners and managers require financial statements to make important business decisions that affect its continued operations. Financial analysis is then performed on these statements to provide management with a more detailed understanding of the figures. These statements are also used as part of management's annual report to the stockholders.