Whether you wish to invest in business or sell your business, we will negotiate hard on your behalf to ensure you are closing the best deal possible. Our clients' best interest always comes first.
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Information for Buyers
Make sure you're buying the assets, not the business.
If the seller is a corporation or LLC, under no circumstances should you buy stock of the business. Instead, offer to buy the assets of the business, and form a separate company to act as the purchaser. Why? Two reasons: First, you get a better tax treatment, since your "tax basis" on the assets will be the amount you paid for them, rather than the amount your seller paid for them long time ago;
Second, if he owes money to people or is being sued by someone, you won't assume any of those liabilities if you buy only the assets.
Ask about sales taxes and payroll taxes.
In many states, even if you buy a business's assets, the state tax authority can come after you if they find out the seller owed sales, payroll and other business taxes. If the seller has employees (other than himself), ask if he was using a payroll service, and make sure he's current in his employment tax payments. Then ask the state tax authority to issue a "clearance letter" saying the seller is current in his sales and use taxes on the closing date. This may take a while, but it'll save you tons of headaches down the road.
Find out if you can assume the seller's lease.
Is the seller leasing the premises where he conducts his business? If so, you should find out (1) how much time remains on the lease term and (2) whether the landlord is willing to let you assume the seller's lease "as is," without an increase of rent. If the lease has less than two years to run, you might want to spend the money now to negotiate a new lease with a 5 to 10-year term. Also find out if the landlord is holding a security deposit (usually two months’ rent, but sometimes more). Your seller will probably want you to purchase his security deposit on top of the agreed-upon purchase price for the business assets. If the seller is including the security deposit in the purchase price, make sure that's spelled out in writing somewhere.