1. Income Statement Also called a Profit and Loss or simply P & L The first years P & L will be broken into monthly segments Subsequent years will be annual estimates

2. The Numbers Historical –Available only if we are buying an existing business Research –Similar business in different locations –SBDC’s Back into the Numbers –Prepare reasonable estimates of expenses and then calculate the revenue numbers needed to at least break even –Gross profit estimates are a necessity

3. Expenses Salary? Other payroll expenses –Payroll taxes – 7.65% –Workers Comp – depends on the industry –Unemployment Ins. – also depends on the industry

4. Taxes R/E taxes should be noted above with other expenses Income taxes should be noted below Should be Net Income before taxes Taxes Net Income after taxes

5. Depreciation Go to the IRS web site http://www.irs.gov/publications/p946/ch0 4.html#d0e5798

6. Prepaid Expenses Prepaid expenses cease to be an asset as the year rolls on Those expenses must be accounted for as if we were paying them – on the income statement –An exception might be the deposit and last months rent