There are many factors that you have to consider when you’re purchasing a business that’s already established. Making sure that you think about these before you enter into a purchase contract can benefit you considerably.
One of the most important things to do is to review exactly what’s being sold. Buying a business will typically involve purchasing the name, but you should ensure that you’re receiving the assets of the company and not just the name.
Are the taxes paid?
Don’t focus only on the property tax if you’re considering buying a business. You need to ensure that the payroll taxes and other taxes have been paid. If you purchase a business and don’t do this, you might be on the hook for the amount owed. It’s also a good idea to get a clearance letter from the agency that’s responsible for collecting and monitoring taxes.
What expenses are prepaid?
Sometimes, businesses can receive discounts for prepaying for certain expenses. When you’re considering the purchase of an established business, you should ask what expenses are already paid for. This might be things like advertising programs. Typically, the seller will change the amount that’s outstanding as part of a closing adjustment. If this occurs, be sure that the amount is prorated to the closing date of the business sale.
Obtaining experienced legal guidance can help you uncover hidden factors that might play a role in whether you purchase an established business or not. If you determine that you want to move forward with the purchase, keeping unexpected surprises at bay may reduce your stress and your expenses.