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Can a self employed business be valued and how?

Is it possible to value a self employed business?  I have a friend who is going through a divorce and the partner wants her business valued for divorce purposes.  The business has been trading for over 10 years.

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19th Jan 2018 13:49

Q1 Yes
Q2 A valuer, or perhaps their accountant may be able to help to at least establish in the first instance if there is much of a value.

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to ireallyshouldknowthisbut
19th Jan 2018 13:53

The Op is an accountant.

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to Kevkava
19th Jan 2018 14:37

Kevkava wrote:

The Op is an accountant.

I doubt it. Surely no real accountant would describe a sole trader business as a company.

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to ireallyshouldknowthisbut
19th Jan 2018 14:10

Thank you for your response. I am an accountant but never valued a business before. I don't have the figures at the moment but have been told that the profit was about £35k declared on their tax return each year. Do you know how to value the business please?

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to uktaylor
19th Jan 2018 14:16

uktaylor wrote:

Thank you for your response. I am an accountant but never valued a business before. I don't have the figures at the moment but have been told that the profit was about £35k declared on their tax return each year. Do you know how to value the business please?

Are you going to maybe give us a clue about what the business does? What about its structure, assets, employees, debts ....

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to Accountant A
19th Jan 2018 14:29

They are not my client and only want a value of the business. I only know how long its been trading what the profit estimate is and its a dog grooming company. I don't want to ask for the accounts if I am not able offer the service they require.

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to uktaylor
19th Jan 2018 14:25

Standard procedure is to wet your finger, hold it up to the breeze, and wiggle it a bit.

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to uktaylor
19th Jan 2018 14:32

You need to adjust the profits by a reasonable salary for somebody else to manage the business, say £35,000, and then multiply the resultant figure by a multiple appropriate to the business, usually between 1 and 3.

So your business is worth between 1 x £0 and 3 x £0.

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By DJKL
to Portia Nina Levin
19th Jan 2018 15:14

You forgot about taking into account all the assets on the balance sheet not used/needed re earning the profits, so the Monet , Utrillo and Picasso hanging on the walls of the office do need considered.

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to DJKL
19th Jan 2018 15:33

Would those be the soletrader's walls?

If you're acting for the party with the assets in a divorce case, you start low!

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to Portia Nina Levin
19th Jan 2018 16:02

I'd certainly buy it for that if it's for sale. I might even be prepared to pay a bit more as I will be able to absorb it into my existing dog grooming business.

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19th Jan 2018 15:35

If you are a member of a professional body e.g. ICAEW, ACCA, CIOT I believe they publish guidance on the subject of members offering advice on matters that are outside of their experience and knowledge, and you might want to refer to it.

If you are not a member of such a body you might want to consider (a) generally, the wisdom of offering advice on a subject that you know nothing about, and (b) in particular in circumstances where the advice is likely to be contested, and could be the subject of court proceedings, and (c) the view your PI insurers might take of the matter if you were sued for giving incorrect advice.

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to michaelblake
19th Jan 2018 16:45

michaelblake wrote:

If you are not a member of such a body you might want to consider ...


... (d) asking a forum full of sarky accountants questions that are impossible to answer in the height of tax season. You may get the odd silly response.
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to atleastisoundknowledgable...
19th Jan 2018 19:47

I fully understand what your saying. I too am right in the middle of tax season. Coming on here has been a nice break from tax returns if nothing else.

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to michaelblake
19th Jan 2018 19:44

Thank you for your reply. I am AAT member and do not give financial advise so have already said its not something I could do for them but wanted to find out so as a friend I could give some basic advice about it and its good to know for reference.

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19th Jan 2018 15:57

£8,052.

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19th Jan 2018 16:15

It depends how much the business is reliant on the self employed owner and whether it is as a going concern with them staying or going
I think £8049

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