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Old 01-25-2006, 09:32 PM   #1 (permalink)
 
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Reporting Cash

I am considering purchasing an existing salon. My quetion is this.... The current owner told me that last years revenue was 59K and then he emailed me again and said the 59K was the amount being reported to IRS. He stated that the tanning industry is 60-70% cash business and he told me to calculate that. Is this true? I can't survive on the 59K alone but if there is another 30K in cash that he's not reporting then it's an option. Just curious.
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Old 01-25-2006, 09:33 PM   #2 (permalink)
 
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Re: Reporting Cash

It is primarily cash he is right
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Old 01-25-2006, 09:41 PM   #3 (permalink)
 
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Re: Reporting Cash

Is it possible to have an add'l 30K per year on top of the 59K he's reporting?
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Old 01-25-2006, 09:43 PM   #4 (permalink)
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Re: Reporting Cash

He's not reporting it--how and why?--He lets all cash clients "Tan For Free" and then pockets the money? You better schedule yourself for all the shifts at this salon--you don't want your staff to follow this example and keep the cash transactions for themselves. **** with the IRS is NEVER a smart idea
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Old 01-25-2006, 09:44 PM   #5 (permalink)
 
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Re: Reporting Cash

You also may want to make sure the business is all current with the IRS
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Old 01-25-2006, 09:51 PM   #6 (permalink)
 
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Re: Reporting Cash

Thanks for the advice. If I purchase this salon I would want to do it the right way. I definately do not want the IRS on me. I'm just trying to get an idea of the amount of revenue for this business.
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Old 01-25-2006, 09:57 PM   #7 (permalink)
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Re: Reporting Cash

He still should have his own records of what he really made. I would hang out in the salon for a bit before buying it because he could be saying that to snow you.
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Old 01-25-2006, 10:02 PM   #8 (permalink)
 
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Re: Reporting Cash

I was planning on doing that. He says he has 800+ clients, been in business since 2001. He is selling b/c of a job transfer (he worked for Ford Motor Co). He said he would show me his books and that I could come visit the salon. I told him I'm being cautious. I don't want to invest in a business and end up in bankruptcy
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Old 01-25-2006, 10:06 PM   #9 (permalink)
 
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Re: Reporting Cash

Is it typical for tanning salons not to report the cash intake?
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Old 01-25-2006, 10:11 PM   #10 (permalink)
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Re: Reporting Cash

In the last quarter 69.8% of my revenue came from credit/debit cards. I really doubt that he pocketed all the cash the business generated so do some more homework or better yet, just base your offer on the profit (if any) that is verifiable.
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