August 25, 2008 8:33 PM EDT
The owner can get funds out of the business in a number of ways, depending upon the structure of the business (sole-proprietor, partnership, corporation, etc) his/her income may be easy to determine. For example if it is a corporation owner`s salary will be on a W-2 issued by the corporation whereas if it is a sole-proprietorship, the net income/loss is taxable to the owner.
The owner could get "income" out of the business by receiving rental payments for facilities he/she leases to the business. Or interest on money loaned to the business. There may be some liabilities (on the balance sheet) that are due to the owner. There may be funding to a retirement plan for the owner, etc.
In order to determine if the purchase will work for you, you`ll need to use the business income statement and make a projected income statement including any changes in income and expenses you foresee.
vwebworld8/26/2008 1:36 AM
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