Ask the owner of the business to show you the financial statements and tax returns for the business for the previous five (5) years. This is part of the usual due diligence that any purchaser of an ongoing concern should do and that any seller should anticipate. If the owner refuses to provide this information or claims that he or she cant find it, look for a different opportunity.
Nina L. Kaufman, Esq. is an award-winning New York City attorney, edutainer and author. Under her Ask The Business Lawyer brand, she reaches thousands of entrepreneurs and small business owners with her legal services, professional speaking, information products, and LexAppeal weekly ezine. She also writes the Making It Legal blog.