New business in US...... (small business, financial, pay, real estate)

[ancfaber]

Hello, I'm thinking about to move to the United States in few months, particularly in California, where, in company with my nephew, I'm going to buy an existing business. I'm having a strong idea about the business, so no probs in this case, but I need some confirmation about some accounting definition entity.
Well, I've heard of "annual adjusted net" and "annual revenue". I can imagine what they refer to, but I need to know if I've to pay any other tax (state or federal) on the "annual adjusted net" sum. I want to clarify that I understand about business accounting, but I have problems caused by the different systems of interpretation and terminology.
Thanks
Fabrizio

[Jonotastic]

Annual Revenue is simply the gross annual income before taxes and expenses.

Annual Adjusted Net:

The amount of money the new owner “will make from the business – the true bottom line” and what the buyer of the business can expect to “clear” from the business once they own and operate it in their own way.

Adjusted net income usually contains these line items below from the business financials and tax returns – these numbers are “added back” to the net income at the end of the year to obtain the “adjusted net income” of the business.

1. Owner's Salary
2. Depreciation
3. Interest
4. Amortization
5. One Time Expenses (Items like equipment, trucks, etc)
6. Owners Personal Expenses (Auto expenses, entertainment, travel)
7. Owners Pension/Retirement
8. Rent (If the real estate is being sold with the business)

There are other possible “add-backs” such as family salaries - family members that don’t actually work at the business yet magically earn a salary (and will be gone when the new owner takes over), and managers that may be replaced when the new owner completes the deal.

Remember many owners of small businesses “write-off” as many business expenses as possible to limit their tax liability at the end of the year. Many of these “write-offs” can be added back to the net income to obtain the “adjusted net income” a new owner of the business will be obtaining when they buy and take over the business.

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Neither term includes state income tax or federal income tax. There are states that don't have a state income tax. However, California is not one of them.

[ancfaber]

Thank you, sir.