New or used company?

New or used company?

What is the ideal option for those who wish to start their own business “eget företag”? Does they establish a new company, or buy an existing one, and register it with the company registration office “Bolagsverket” ?

Sometimes, we see some advertisements on Swedish web sites, about selling an existing companies to those who want to start their business. Websites in Sweden, and elsewhere are full of such an advertisements, including government websites, as well as registration office “Bolagsverket”.

Due to the importance of this topic. Next Gates Team has decided to clear some important points “the advantages, and disadvantages” of such a decision. The risks that may result from buying an existing company, without having knowledge of its previous activities, or being not experience enough to evaluate it properly, so people don’t become a prey to some persons who announced this companies.

Buying an existing business advantages

• Shorten the time: You can start your business as soon as ownership is transferred to you. In Sweden, it usually doesn’t take long time to register a company. It can take two or three weeks to get a license to run your business.
• Take the company’s previous results advantages, if the results were a real loss, not fake. This can help you by reducing taxes, whenever you start managing the company and gain income from it.
• Usually, the owners of company “for sale” want to sell it quickly, due to different circumstances. This give you the chance to negotiate with them on the price. You may buy it with good discounts. There are many stories about investors bought company in cheap cost, and turned it into giant company with large returns, even so at short time.
• Possibility of taking advantage of holding the old company name, If it was well-known and has a market value.
• Possibility to benefit from the old data and experience of the owners, such as, customer records, addresses, etc…

Buying Risks

• There are a lot of companies sold because of, accumulated losses. Their owners were not able to pursue their activities. Debts or other reasons. If you buy it, you will be responsible for paying the debts, whether it is owed to private or public entities, such as, tax agency”Skatteverket”.

Therefore, it is important to consult specialists, who can analyze the final statements of this company, to determine its true financial position, as well as the amount of debt, and taxes.

• After you purchase this company, you are legally full responsible for its previous activities, which are still ongoing (the financial year of the company). You are responsible for the validity of the submitted financial reports, and for the authenticity of these submitted documents to the tax agency “Skatteverket” also.
• Pay attention to the fact that these companies are usually promoted at low prices, so buyers can be tricked. They will have great problems because of their lack of knowledge, and ability to evaluate the company scientifically and accurately.

Conclusion

You can only buy an existing company, if you can hire an expert to investigate the real financial position of it. Its debts and liabilities to third parties, as well as verifying the authenticity of submitted documents to local authorities, such as, Tax agency “Skatteverket”. Whether these submitted data and reports by old owners were false or true. You will become the only responsible before the law.