When purchasing a business there are many factors to consider. When acquiring a business you also acquire any of the unpaid taxes and liabilities that the company has. You should always consult a lawyer when buying a business but these steps should help you get on the right track.
Ask the owner to show you the previous few years of financial statements. If the business owner uses an accountant then he/she may not have copies of the documents readily available. Looking at the profits and loses of the business will help you determine how soon you will get your investment back. You can show an accountant these documents for a better explanation of how the company is performing.
Get copies of all legal and contractual documents that the current business owner has, such as sales tax licenses, incorporation papers, a doing business as document, lease agreements, and etc. You should keep a copy for your files and it will help you understand your legal responsibilities as a business owner.
Check out your state’s website to see what you will have to file with the state where purchasing the business. Most state’s have helpful online guides or toll free numbers to call.
Find out what kind of business insurance the company has because you will need to have some form of insurance. It is often easiest to keep the same type of insurance policy already in place.
Speak with a lawyer before purchasing a business. They can provide amazing information on all the steps that need to take place when purchasing a business. They can also look over all the legal documents to help you be more adequately prepared for becoming a business owner.
Visit SBA.gov to obtain a check off list of everything you need to include in a sales agreement and a check off list for buying a business.
Business.gov and SBA.gov can have very valuable resources for first time business owners.
Always consult a business lawyer for all of your legal information.
Beware of any hidden liabilities or unpaid taxes of the business you are purchasing.
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