|The business you have been dreaming of is almost yours! The closing is the final step in the process of buying the business. The following items should be addressed in a closing:
- Adjust Purchase Price - This will take care of prorated items such as rent, utilities, and inventory up to the time of closing.
- Review Documents Required to be Provided by the Seller - These documents should include a corporate resolution approving the sale, evidence that the corporation is in good standing, or any tax releases that may have been promised by the seller.
Check with your local department of corporations or Secretary of State. Also review the sales agreement for buying the business.
- Signing Promissory Note - In some cases, the seller will carry back financing, so have an attorney review any Note documentation.
- Security Agreements - These documents may be necessary if you are going to finance your purchase. A Security Agreement lists the assets that will be used for security as a promise for payment of the loan.
- UCC Financing Statements - These documents are recorded with the Secretary of State in the state you will be purchasing your business. Again, these documents are necessary if you are going to finance your business.
- Lease - If you agree to assume an existing lease, you will be required to execute the assumption. Make sure that you have the landlord's concurrence to assumption of the lease. If you are negotiating a new lease with the landlord instead of assuming the existing lease, make sure both parties are in agreement of the terms of the new lease.
- Vehicles - If the purchase of the business includes acquiring or purchasing vehicles, you may have to execute the transfer documents for the vehicles. You can check with your local Department of Motor Vehicles to determine the correct procedure and necessary forms.
- Bill of Sale - The bill of sale will be proof of the sale of the business and will transfer the ownership of the other tangible business assets not specifically transferred on their own.
- Patents, Trademarks and Copyrights - If there are any patents, trademarks and/or copyrights associated with the business you are purchasing you may need to execute the necessary forms as part of the transaction.
- Franchise - There may be the need to have to execute franchise documents if the purchase of the business is a franchise.
- Closing or Settlement Sheet - The closing or settlement sheet will list all financial aspects of the transaction. Everything listed on the settlement should have been negotiated prior to the closing, so there will be no surprises.
- Covenant Not to Compete - It is a good idea to have the seller execute an agreement to not compete. This will help add to the success of your operation of the business without any interference from the previous owner.
- Consultation/Employment Agreement - If the seller is agreeing to remain on for a specified amount of time, this documentation is necessary for legal purposes.
- Asset Acquisition Statement - This document will indicate how the purchase was allocated and the amount of various assets, which is important for your tax return.
- Bulk Sale Laws - Make sure that all bulk sale laws have been complied with in the transfer of the business assets.