UpComing Event

BuildTech Asia 2017 | International Building Technology Expo

18 - 20 October 2016, Singapore EXPO Hall 3, 4 & MAX Atria

The 6th edition of BuildTech Asia is the region’s leading trade show for the building and construction industry that addresses the challenges of building and construction across different verticals such asConstruction Machinery & Equipment, Productive Technologies, Building Materials & Architectural Solutions and Quality Finishes. Dedicated to make a difference to the future of the industry, this 3-day trade event provides a platform for business professionals to showcase, share, learn and succeed in the regional built sector.

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Bussiness Valuation

A Business Valuator (or anyone valuating your business such as an accountant) will use a variety of business valuation methods to determine a fair price for your business, such as: 

Three Business Valuation Methods 

1. Asset-Based Approaches 

Basically, these business valuation methods total up all the investments in the business.

Asset-based business valuations can be done on a going concern or on a liquidation basis.
A going concern asset-based approach lists the business's net balance sheet value of its assets and subtracts the value of its liabilities.
A liquidation asset-based approach determines the net cash that would be received if all assets were sold and liabilities paid off.

Using the asset-based approach to value a sole proprietorship is more difficult. In a corporation, all assets are owned by the company and would normally be included in a sale of the business. Assets in a sole proprietorship exist in the name of the owner and separating assets from business and personal use can be difficult.

For instance, a sole proprietor in a lawn care business may use various pieces of lawn care equipment for both business and personal use. A potential purchaser of the business would need to sort out which assets the owner intends to sell as part of the business. 

2. Earning Value Approaches

These business valuation methods are predicated on the idea that a business's true value lies in its ability to produce wealth in the future. The most common earning value approach is Capitalizing Past Earning.

With this approach, a valuator determines an expected level of cash flow for the company using a company's record of past earnings, normalizes them for unusual revenue or expenses, and multiplies the expected normalized cash flows by a capitalization factor.

The capitalization factor is a reflection of what rate of return a reasonable purchaser would expect on the investment, as well as a measure of the risk that the expected earnings will not be achieved.

Discounted Future Earnings is another earning value approach to business valuation where instead of an average of past earnings, an average of the trend of predicted future earnings is used and divided by the capitalization factor.

What might such capitalization rates be? In a Management Issues paper discussing "How Much Is Your Business Worth?", law firm Grant Thornton LLP suggests:

"Well established businesses with a history of strong earnings and good market share might often trade with a capitalization rate of, say 12% to 20%. Unproven businesses in a fluctuating and volatile market tend to trade at much higher capitalization rates, say 25% to 50%."

Valuation of a sole proprietorship in terms of past earnings can be tricky, as customer loyalty is directly tied to the identity of the business owner. Whether the business involves plumbing or management consulting, will existing customers automatically expect that a new owner delivers the same degree of service and professionalism?

Any valuation of a service oriented sole proprietorship needs to involve an estimate of the percentage of business that might be lost under a change of ownership. Note that this can be mitigated in many cases, such as when a trusted family member (who may already be familiar with the client list) takes over the business. 

3. Market Value Approaches

Market value approaches to business valuation attempt to establish the value of your business by comparing your business to similar businesses that have recently sold. Obviously, this method is only going to work well if there are a sufficient number of similar businesses to compare.

Assigning a value to a sole proprietorship based on market value is particularly difficult. By definition,​ sole proprietorships are individually owned so attempting to find public information on prior sales of like businesses is not an easy task.

Although the Earning Value Approach is the most popular business valuation method, for most businesses, some combination of business valuation methodswill be the fairest way to set a selling price. 

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Payroll Services

Akuntara offers a full range of confidential outsourcing services for the management of payroll, personal data and employee benefits. Our Asia wide services are fully supported by our in-house computer systems and a dedicated team of professional staff providing a dedicated point of contact.

There are advantages in outsourcing payroll services, as follows:

• Solutions tailored to meet your requirements
• Up to date payroll procedures
• Timely and efficient payroll process
• Off site confidentiality of information related to remuneration
• Accurate and timely payroll tax returns
• Provision on demand for shortfalls in payroll personnel
• Extra time gained for in-house staff to focus on core duties

Our services also include the following:

• Ensuring that your company complies with tax regulations relating to employee withholding tax
• Liaising with the Department of Manpower to keep apprised of all changes in the regulatory environment
• Advising on payroll taxes, social welfare (Jamsostek) payments and related procedures

More and more, companies are choosing to outsource payroll services in order to increase efficiency and to concentrate on core business.

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Accounting Services

Akuntara have many years of experience in helping companies prepare financial statements and have intimate knowledge of accounting principles and procedures in Indonesia. We are also familiar with local regulatory and tax issues. We offer efficient, effective and professional solutions that, in many cases, are more efficient and cost effective than deployment of resources and tools in-house.

Our accounting services include bookkeeping, compilation of financial statements and corporate accounting services. All services are based on the applicable accounting standards, such as Indonesian GAAP, local rules and standards.

Bookkeeping services include assistance with the following:

• Establishing an appropriate chart of accounts for your business
• Recording your daily, weekly and monthly accounting transactions
• Recording appropriate accounting accruals at the end of each accounting period
• Maintaining general ledgers and sub-ledgers that support the general ledger balances

Compilation services include assistance with the following:

• Compiling your financial statements in accordance with GAAP in Indonesia
• Converting financial statements to comply with head office GAAP requirements
• Preparing periodic financial reports that meet your needs to manage the business
• Preparing reporting packages to head office
• Preparing monthly, quarterly and/or annual VAT and withholding tax returns
• Improving the accuracy and precision of your financial statements and tax returns.

Corporate accounting services include assistance with the following :

Setting up your fiscal structure and designing your financial and accounting systems based on your needs

• Project accounting
• Secondment of our staff to help fill your manpower shortages on a short-term or long-term basis
• Inventory stocktaking
• Training and development of your accounting staff

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