I am wanting to purchase a business and people say that i should inspect the books.
Does this mean that i should look at the accounts or actually the books and records?
Surely i do not need to look at the books and records?
John
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It depends
If you are buying a company, you really need professional advice. There can be many hidden liabilities and when you buy a company, you buy it warts and all.
If you are buying the business, this implies you are paying for more than just the physical assets. If that includes an element of goodwill, how do you know this is justified. The books and accounts should disclose how the dealings with customers are going. Has there been a recent downturn in sales that means the goodwill is not what it might appear? If you are buying customer debts, are these collectible? If you are not familiar with accounting, expert help is highly recommended.
If you are just buying the physical assets, a building, plant, vehicles, stock, then you may need advice from the relevant experts on these assets. Even here, you may find that you suffer from any negative reputation from the existing owners. Being reassured that the business has been thriving will give you some comfort here.
See an accountant asap!
What you should really do is to see a professional asap. A suitably qualified accountant eg ACCA will be able to advise you on all the aspects you need to consider. It will be money well spent.