Company can be screened many ways. It may happen with liquidity, cost-effectiveness or labour management point of view. Moreover, business acquisitions or mergers, or only a potential or ongoing tax investigation can be the reason for due diligence.
In Hungary a lot of tax audits start and the most cases complete with tax deficit. If you would like to get a clear picture about your company from an independent expert, we kindly recommend our office to request a full due diligence under the following guidelines:
Why is it necessary the due diligence of company?
The Pre-Tax or assessment service for tax audit ignore unnecessary analysis for the customer, we merely emphasize what the company may expect in a potential or ongoing tax investigation and what the solution is for the obstacles. Tax law is time-barred after 5 years so the due diligence holds for the previous five years. If it is requested by our customers, acquisitions or mergers can be screened, but any other focus point is possible to be determined. The secret of the success of Pre-Tax due diligence in all cases an attorney, tax lawyer, tax advisor and auditor effective cooperation. The company has to be tested in two different ways in order to meet all requirements in case of results and solutions. It does not matter whether we talk about a Hungarian or a foreign business, both a lawyer and a tax auditor should check the business.
In any case the due diligence is examined from tax point of view as well, therefore it is so called PRE-TAX due diligence.
How is a PRE-TAX due diligence going?
First, we make the company's accounts and cost understand for the clients in the audit opinion. Investment, value added tax, income tax, corporation tax, accounting policy, the discipline of documentation, lack of books are reviewed for accounting purposes also.
The audit reveals a quantitative result and it always contains suggestions, solutions, and draws particular attention to matters requiring immediate action.
On the other hand we investigate the company for tax purposes:
- reviewing court details of the company
- personal concentrations of members of the company
- pricing, tax orderliness
- purchases, sales,
- information on staff,
- the composition of costs
- personnel expenses, capital assets, stocks, funds, credits, affiliated companies, contractors, contracts, proof of invoice, offshore relationships and the adequacy of loan transactions etc..
The purpose of the investigation in each case is to determine whether the company's accounts and documents in the present form is compliance with applicable laws, accounting, and tax law.
These documents are also examined if those can be approved for a tax audit or not.
It is essential to have a complete legal and tax due diligence of the business in case of the company sale, acquisition or M&A transaction. It is the same procedure for small or multinational companies.
If you intent to sell your company, it might be worth doing a background check before the sale negotiations, which would be presented for the future owners. As conclusion can be drawn from it and they are able to see the company's prosperity. Moreover, in this case, the material will be available in accordance with a systematic way of inquiring. So important documents quickly can be reviewing when it is needed. If you buy a large company, it is evident that a team of auditors and lawyers screens the buying business. We highly recommend the same for small companies because the cost is negligible compared to a poorly managed business. An improperly managed business later causes much more trouble and, unfortunately, these problems can not be prevented otherwise.
What are the benefits of a due diligence?
· I know the mistakes which were made and know how to correct
· After due diligence I know which partners should be paid more attention to
· In the future, I handle my business in accordance with the guidelines.
· More money remains in my company, I can take better deal.
· The cost of due diligence is only a small amount comparing to the cost of any tax official statement.
· I can safely buy out a company, or sell one or merge with another company
· I am aware of how much the tax deficit before Authority, tax fine and late charges could be
we highly recommend you to take expert help and write us to info [wnW5DKrg] drszeiler.hu about the issue.