Business valuation is critical to raising venture capital seed money, but it also plays an integral role in planning estate taxes and selling a business. Finding the value of a small business or home based enterprise is more difficult than calculating the clear value in the number of shares for a public corporation listed on a stock exchange. When calculating the value of a small business, parties should take into account elements such as assets, liabilities, profitability, customer base, goodwill, sales revenues and proprietary operations management workflow techniques. Particularly, a small business valuation is predicated on finding an acceptable figure that suits both parties expectation. In the case of estate planning, the vehicle or enterprise structure i.e. TRUST, S-corporations, nonprofits and sole proprietorships will have tax implications that should be considered years in advance of the event.
Consulting a tax attorney, accountant or financial planner is best in assisting entrepreneurs to arrive at the optimal value of the business. This serves as useful supporting materials to establish the basis in achieving a reasonable fair market value for the enterprise. By using knowledgeable advisors, it provides a second opinion solidifying your findings.