CLA Connect Open Forum

Subject: Buying question

1.  Buying question

Posted 02-16-2017 18:21
Would anyone be able to tell me if Laundromats typically include their quarters in their assets when selling the location or does the buyer typically purchase the quarters from the previous owner outside of the purchase contract?


2.  RE: Buying question

Posted 02-16-2017 18:35

Ann,

If you buy the business entity, the operating capital would be included. If you are buying the assets - equipment, goodwill and lease, the operating capital is not included in the sale.

Consult with a contract attorney for guidance on your specific purchase.



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Larry Adamski
Muskegon Laundromat
Spring Lake MI
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3.  RE: Buying question

Posted 02-16-2017 19:00
Thank you,
I am buying the business entity which includes all assets. I was asked to purchase the quarters separately and was confused bc I assumed they were included since I'm buying the whole business. I was told that buying the quarters separately is typical and wasn't sure if that's true bc I can't find anything online regarding this specific question. I appreciate the info!

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Ann
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4.  RE: Buying question

Posted 02-16-2017 19:04
Including the quarters would be like lowering the sales price.
No they will not be included.

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K J
Store Owner/ Employee
Binghamton
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5.  RE: Buying question

Posted 02-16-2017 19:09
Even if you're buying the business in its entirety?

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Ann
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6.  RE: Buying question

Posted 02-16-2017 19:13
Only if there was a specific amount of quarters stated.
Among all the coin boxes and changers there could be $500 in quarters or there could be $5000 in quarters.

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K J
Store Owner/ Employee
Binghamton
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7.  RE: Buying question

Posted 02-16-2017 19:31
I have never heard of cash being included in a business sale no matter how you are buying it.

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Chris Mirisciotta
Store Owner/ Employee
Canon Coin Laundry
Canonsburg PA
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8.  RE: Buying question

Posted 02-16-2017 19:50
Ann,

From a tax obligation stand point, you may not want to buy the business entity

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Larry Adamski
Muskegon Laundromat
Spring Lake MI
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9.  RE: Buying question

Posted 02-16-2017 19:51
May I ask why, Larry?
I'm buying from a trusted individual

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Ann

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10.  RE: Buying question

Posted 02-16-2017 20:04
Ann,

If you buy the business entity, that is, its formal organizational structure such as an S corporation, you will have to assume that depreciation schedule.  If you buy the business assets and form a new organizational structure such as an LLC, you will start with a new depreciation schedule based on the amount of money allocated to the purchase of the equipment part of the business.  So you likely will get more depreciation with a new depreciation schedule rather than taking over an old depreciation schedule that has been running for years before you came into the picture.

Now, assuming you want to do an assets sale, you're not out of the woods yet.  You and Mr. Seller have to agree on how the sale price will be allocated among the equipment, goodwill, agreement not to compete, real estate, etc.  It's in Mr. Seller's interest to allocate more money to goodwill and less to equipment but it's in Ms. Buyer's interest to allocate more money to equipment (which you can depreciate) than to goodwill (which you cannot depreciate).  If big bucks are involved, you may want to talk to a CPA.  These deals get complicated real quick.


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Larry Adamski
Muskegon Laundromat
Spring Lake MI
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11.  RE: Buying question

Posted 02-16-2017 21:20
If you buy the structure you also assume ALL liabilities, known and unknown. Huge no no.

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Timothy Foster
Multi-Store Owner
Toledo
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12.  RE: Buying question

Posted 02-17-2017 09:34
Larry, you say goodwill cannot be depreciated.
It cannot be depreciated as quickly as an asset but can be over I believe a longer 10-15 year straight line period.

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K J
Store Owner/ Employee
Binghamton
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13.  RE: Buying question

Posted 02-17-2017 12:09
Sorry, I didn't mean to say I was purchasing the building itself. I am not, just the business and the lease but not the property.

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Ann Ward

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14.  RE: Buying question

Posted 02-17-2017 12:17
I am greatly impressed and also daunted at the information you all have given me and I want to thank you for it. I'm rethinking my plan of purchasing the S Corp vs purchasing the business and forming my own LLC. I wish it wasn't tax season because I think I need the advice of a CPA!

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Ann Ward

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15.  RE: Buying question

Posted 02-17-2017 12:23
Is depreciation schedule more important when buying newer equipment or older equipment? I'm buying older equipment.

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Ann Ward

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16.  RE: Buying question

Posted 02-17-2017 12:51
Edited by Larry Adamski 02-17-2017 14:05
Ann,

Older equipment means Mr. Seller's depreciation schedule is about empty meaning you get very little depreciation if you inherit his schedule. You want to begin fresh with a new entity such as Ann's DCO Laundromat LLC.

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Larry Adamski
Muskegon Laundromat
Spring Lake MI
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17.  RE: Buying question

Posted 02-17-2017 13:12
I am a CPA in St Pete, FL and I own a Laundromat. If you want to give me a quick call to discuss your purchase I can be reached at 727-327-6608.

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Kathy Newman
Store Owner/ Employee
Kathy's Coin Laundry
St Pete Beach FL
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18.  RE: Buying question

Posted 02-18-2017 12:27
If your looking for a CPA I used Jeannette Riley.  She was very knowlegable, available to answer questions and reasonably priced. And yes if I am responsible for new business she will give me a discount. 

If you would like email her   Jeannette@JERileyCPA.com

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Tim Rittgers
Former Store Owner
Colfax Laundry
W Sacramento CA
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19.  RE: Buying question

Posted 02-17-2017 11:17
I've purchased 6 Laundromats and the quarters are always counted and purchased separately after closing.

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TIM FLINT
Store Owner/ Employee
TROY IL
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20.  RE: Buying question

Posted 02-17-2017 10:03
If you buy the coin laundry, then the cash is never include, because no one know what the value at the closing time, also all inventory in vending system (some time the spare parts) paying extra too.
For card system, then the owner will pay you the float value at the end of the closing time.
It is fair in both way.

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Phu Tran
Store Owner/ Employee
Garland TX
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21.  RE: Buying question

Posted 02-17-2017 11:32
You pay for cash on cash at the closing.  He leaves $500 in the store (Count it with the owner) and give him $500 at closing.
RP

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Richard Porqueddu
Store Owner/ Employee
Sayville Laundromat, Inc.
Middle Island NY
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22.  RE: Buying question

Posted 02-17-2017 16:12
I think the point was made, but if you buy the S Corp or certain other entities, you may be buying into the good, the bad, and the ugly of the entity.  Any bad business moves, liabilities, etc could become your problem as the entity continues to exist.   Like Larry, it is not something I would consider.

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Les Monthei
Potential Investor
Redding CA
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23.  RE: Buying question

Posted 02-17-2017 19:32
When we purchased ours, the previous owner emptied the quarters from the machines and changer hoppers and we put our fresh $1400 in changer hoppers. We transitioned at 8 am on Monday and haven't stopped. Be careful about buying the entity & make sure you aren't buying any potential liability from the previous owner. Good to have your own lawyer review p & s agreement.

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Daniel Dove
Store Owner/ Employee
Chloes Laundromat
Hope Valley RI
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24.  RE: Buying question

Posted 02-18-2017 18:50
All excellent answers & good points to consider. But the purchase is also a negotiation. If it's already too late then it is so.  

 The agreed selling price could include the quarters in the hoppers if it's so stipulated.  If it's not, the choices are count it then pay, give the owner the quarters them add your own etc..

 When I purchased mine & after shadowing the owner for ~ 4 months, I gave a deposit, paid the remainder off when we closed the deal. He then gave me the keys 2 cases of bounce, 2 cases of sodas, we looked at the hoppers which were more than 3/4 full. He said let's call it 400.00 we shook hands wished each other luck & so it began...

 Never looked back since.

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Juan
Store Owner/ Employee
Cocoa FL
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25.  RE: Buying question

Posted 03-02-2017 16:45
Looking at Laundromats to buy one. Found one in a great location with good visibility and ample parking.
Good demographics The place needs someTLC.  Estimated around 12K. Equipments are a concern.
This is the list of equipments:-

WASHERS- 46 EA

14 EA Top Loader - SQ - 10 years old
15 EA Maytag ( 25 & 35 lb )- 15 years
8 EA SQ 40 lb 13 years
4-EA SQ 50 lb 13 years
3 EA Continental 50 lb 13 years
2 EA Continental 75 lb- 13 years

DRYERS- 25 EA

8 EA Dexter - 7 Years Old
17 EA Maytag - 15 Years

Monthly Net income per seller $ 6500.00
Having challenges in coming up with an offer.

Will appreciate your valuable input.

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Shawn Kumar
Potential Investor
Chino CA
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