How to enter purchase of an existing business in QB?

Hi there, @Labyla79. I'll help you record the acquisition of an existing business in QuickBooks Online (QBO).

You can record the purchase of assets using the Check or Expense feature. Make sure to set up the accounts in the Chart of Accounts. Then, add the inventory items if you intend to track their quantities. 

Here's how to enter an expense or check:

1. Select + New. Then select Expense or Check.
2. In the Payee field, select the supplier. 
3. Select the payment account.
4. In the Payment date field, enter the date for the expense.
5. In the Payment method field, select how you paid for the expense.
6. If you want detailed tracking, enter a Ref no. 
7. Under Category details, select the expenses and assets you acquired. Then enter a description. You can enter the inventories under the Item details section to itemize the expense.
8. Enter the Amount.
9. When you're done, select Save and close.

Then, to enter the promissory note, we have a detailed guide on how to set it up and how to record the repayments. Head to this link: Track a loan in QBO. 

I'd still recommend speaking with an accountant to learn the best way to account for the company acquisition. QuickBooks can also help when it comes to working with an accountant. Using the My Accountant tab, you can invite an accountant you're already working with to be a user in your books so they can work on the transactions directly. That same tab also provides you with the Find a pro to help button. This connects you to our directory of QuickBooks-certified accountants near you. 

Don't hesitate to visit us again if you require further assistance, @Labyla79. The Community is always here to help. Have a great day.

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@Labyla79 wrote:

We will be purchasing a new business for $100k - to be paid fully via our C-corp - on 4/1/22.  This new business will be completely merged in with our current business.  How do I go about to input the following from the business purchase on QB?  

Furniture/Equipments $49k, Trade Name $10k, Goodwill $10k, Lease/leasehold improvements $1k, Covenant not to compete $20, Inventory of stocks in trade $10k.  Then there's a promissory note to make payments on of $600 per month on a $3k machine purchase.   Thank you for helping!

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You can use either a Bank Account, Cash Account, or Credit Card. Using the drop-down menu under Category Details, choose the tax category that is best suited to your needs. You will need to enter the purchase amount.

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@Labyla79 

This is dependent on how the company tracks fixed assets and inventory.  For ease, all FF&E is lumped together in the journal entry below.  FF&E, goodwill and leasehold improvements generally have different depreciation schedules so they need to be broken out.  The covenant not-to-compete is an expense.  When you "stocks in trade" do you mean inventory or business supplies consumed in the operations of the business?  The journal entry below assumes its inventory.  If you track inventory in QBO, then you will enter that at the item level and not via a journal entry.

You can also write a check in QBO for $100K and use all of the debits above as the accounts except the $3K for the financed equipment.  You can journal entry that by debiting FF&E and crediting the loan payable for $3K.

how do I do the entry in Quickbook?

Have a company and purchasing another company. Adding company in to excisting business. Buying business for $20,000. Paid $5,000 upfront and paying $1,500 for 10 months. How do I record transaction using my current Quickbooks account? No inventory involved. Taking over business with existing customers.

Thanks,

Terry

@talling 

When you record the business purchase, you need to allocate the purchase price among the assets purchased, assuming this was an asset sale.  Do you have the allocation?

not sure last message was sent

Bought business in October 2022 for $20,000 and trailer for $2,500. Paid $5,000 of $20,000 and starting in April 2023 $1,500 every month until $15,000 is paid off. Paid $2,500 up front for trailer. About $2,000 of $20,000 was for supplies (sprayer, compressor, paint and supplies). 

Thanks