do i need a lawyer when buying a business

Is an attorney essential when starting my business?

Therefore, if you are considering purchasing a business, it may be in your best interest to consult a local business lawyer before you make any offers. Your lawyer can assist you with the negotiation process, draft and review the terms of your purchase agreement, and provide general guidance that can help get you the best deal for your investment.

What is the job description of a business attorney?

Jan 16, 2018 · When Do I Need a Business Lawyer for My Small Business? Issues You Can Handle on Your Own. There are certain matters that are fairly straightforward and/or not unduly difficult... Issues Where You Will Need a Business Lawyer. Most of the issues outlined above can be handled by any intelligent... An ...

What does a corporate lawyer actually do?

When buying or selling a company, it is important to have experts to back up the owner during these transactions. A lawyer is needed for interactions, contracts, documentation and various transactions, but an accountant is necessary for the financial data, numbers and funds either being obtained or when buying a new business. Lawyers are needed for multiple reasons, but …

Should I hire an attorney?

Nov 23, 2005 · First off, get a good business lawyer and an accountant to help you with the paperwork, because even with a small business like this, there's going to be a ton of it. Frankly, it sounds like you...

Issues You Can Handle on Your Own

There are certain matters that are fairly straightforward and/or not unduly difficult to learn and therefore do not require the services of an attorney who charges at least $200 per hour. There are enough expenses associated with running a business, why not save yourself a load of money and do it yourself if you can?

Issues Where You Will Need a Business Lawyer

Most of the issues outlined above can be handled by any intelligent business owner (if you can run a business, you can certainly fill out IRS forms or fill in boilerplate business forms). There are times, however, when a business faces issues that are too complex, too time consuming, or fraught with liability issues.

An Ounce of Prevention

While you certainly need to retain an attorney for the serious issues above, your emphasis should be placed on preventing such occurrences in the first place. Prevention does not necessarily involve hiring an attorney, though consulting with one wouldn't hurt.

Get in Touch with a Business Attorney Before You Need One

You won't need a lawyer for each and every legal issue that comes up in your business. But when you do, it's good to know where to find the right one. And -- more to the point -- you may not know you need legal help until it's too late, as attorneys can help you stay in compliance with the law and spot developing legal issues early.

What is closing in real estate?

Closing. Closing is when the deal is completed. It's a paper-intensive process. At this time, you'll want to make sure: all documents are signed and notarized if required (such as deeds and lease assignments) the sales proceeds are disbursed properly in accordance with the terms of the agreement.

What is an asset purchase?

Generally, the purchase or sale of an incorporated small business will be in the form of either: an asset purchase, where the buyer purchases some or all of the seller's assets. This transaction is often favored by buyers because you get the assets, like equipment and inventory, without taking on the seller's debts and liabilities. ...

What should a letter contain?

Typically, the letter should contain: how long the buyer and seller are willing to keep the deal open. a binding promise by the purchaser regarding confidentiality of the seller's trade secrets, like customer lists and other sensitive company information. a binding promise by the seller not to negotiate a sale with any other prospective purchaser ...

What is a formal final agreement?

A formal, final agreement is the culmination of the negotiations. It contains all the details of the deal: the price, the terms of the deal, when the business or assets will be turned over, whether they will be held by an escrow agent, and other important items. Usually, the agreement goes through many drafts and is finalized for ...

What does a lawyer do when selling a business?

When selling a business, a lawyer often works with other professionals to ascertain the value of the company, what assets and liabilities exist and how best to ensure this information appears in a positive manner to the potential buyer. This means explaining the structure, the layout, the files and figures and how employees ...

What does a business lawyer do?

The lawyer may need to contact state officials, file documents with certain agencies and obtain licenses when buying a new company. It is his or her job to protect the owner from litigation, liability and legal injury when buying or selling a company. With a business lawyer, it is possible to achieve success. Provided by HG.org.

Why is it important to have an accountant?

A lawyer is needed for interactions, contracts, documentation and various transactions, but an accountant is necessary for the financial data, numbers and funds either being obtained or when buying a new business. ...

What is due diligence in business?

The employees, agreements in place, clients, business associations and numerous other processes need to be checked out . A lawyer drafts contracts that the buyer or seller needs to sign with the other owner.

Why do lawyers work for businesses?

When buying a business, the lawyer may have more work than when selling. This is to ensure that due diligence is performed and all factors are considered when purchasing the new company.

What is a lawyer contract?

A lawyer drafts contracts that the buyer or seller needs to sign with the other owner. These should have certain conditions to ensure the arrangement is beneficial, and when necessary, advantageous for both parties. When a company is accruing revenue, it is often necessary to have an accountant to keep the book up to date.

When is it necessary to have an accountant?

When a company is accruing revenue, it is often necessary to have an accountant to keep the book up to date. This means coordinating with payroll for employees, client payments and interactions and other financial matters. Without an accountant, it is more frequent that tax violations and other complications may arise.

What to ask before hiring an attorney?

Before hiring any attorney, interview them , ask for references and check to ensure that no malpractice suits have been filed against them. 2. A sharp accountant. Here's why you need one: One of the most important things to consider about buying a business is its financial performance.

What is a business broker?

An experienced business broker is familiar with the local market, has established relationships with the business community and can help you search for a business for sale. Most brokers usually specialize in certain industries. They can advise you on what to look for and what to ask the owner. Oftentimes, they also do professional valuations ...

What is a good accountant?

A good accountant should be a Certified Public Accountant (CPA) through the American Institute of Certified Public Accountants and be experienced in your industry. They should be experienced with small business acquisition, including financial due diligence and business valuation.

Who is Bob House?

Bob House is the President for BizBuySell. com, BizQuest.com and FindaFranchise.com. Buying a business is a big commitment and, while you may feel you’ve found the perfect company, you need a second or sometimes third set of eyes to look at it objectively and determine if it’s worth buying. Furthermore, you need a skilled professional ...

What is a letter of intent?

Also called a "term sheet," a letter of intent (or LOI) is a short, two- or three-page agreement between the buyer and seller of a business that spells out all the important terms and conditions of the sale. For example, it will include the purchase price, how and when the purchase price will be paid, the assets that will be sold to the buyer ...

How long does a landlord hold a security deposit?

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.

Can a state tax authority come after you?

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, use, 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.

Why do you need to buy an existing business?

1. Higher upfront purchasing costs. By buying an existing business, you’ll be able to save money on operating costs, such as inventory and equipment. However, you’ll probably face some pretty sizable purchasing costs. In fact, those purchasing costs might be greater than what it would take you to start a new business.

Why is it important to buy a business?

With an existing business, your initial operating costs are lower because—unless your acquisition is pretty atypical—many parts of the business are already in place and ready to go once you’re at the helm.

What is due diligence in business?

Due diligence is the process of gathering as much information and intel as you can before buying a business, and it is a critical step in your journey to becoming a business owner. During this period, you should work with an accountant and lawyer to make sure you have all the information you need to move forward.

How much down payment do I need to buy a business?

For term loans and SBA loans for when you buy a business, banks typically require buyers to put down a 20% to 25% down payment on acquisition loans. However, the SBA recently made some changes that make it easier for buyers to obtain SBA 7 (a) loans for buying a business.

What is a letter of intent for a business?

The LOI is an indication from the seller that they are serious about seeing the deal through to the end. Once you have it in hand, you can feel more comfortable forging ahead with the remainder of due diligence.

Do brokers make commissions?

Brokers do earn a commission when a sale goes through, but it’s typically paid by the seller.

What should I include when buying a business with employees?

This should also include compensation data, management practices and processes, benefit plans, insurance, and vacation policies.

How to make a business your own?

Here are the steps you'll need to take to make that business your own. 1. Get Your Team Together. Before you get into the process of evaluating a potential business for sale and negotiating, you will need some help from business advisors, including: A certified public accountant (CPA) to help you review the books and financials.

What documents are needed to close a business?

At the closing, a number of documents may need to be signed: The bill of sale, which is evidence of the ownership of assets, and is the formal document representing ownership of the business and its assets. Security agreement (lien) which is evidence that the assets are encumbered by the seller until the note is paid.

What is a CPA?

A certified public accountant (CPA) to help you review the books and financials. Your accountant will be your "right-hand" person during this process; seek someone who can work with the lawyer and you as a team. Accountants are conservative by nature, and some are good auditors, but not good advisors—seek one who is assertive but not aggressive.

What is a business broker?

A business broker for some business purchases. As with the sale of a home, the broker will receive a commission from the seller (up to 10%) for his/her work, payable upon closing. 2. Do a Preliminary Investigation, Including Due Diligence.

Is a negotiation meeting with the owner more important than a job interview?

Your negotiation meeting with the owner may be more important than a job interview. Don't forget that this person is not just selling a business; he/she is selling a life.

What is the purpose of due diligence?

The purpose of due diligence is to allow you to thoroughly examine the company so you can make an informed decision before purchasing. It's also a way to make your mistakes on paper first. Use your advisors, especially your accountant, to help you examine the books and records.

What is a letter of intent?

This is a non-binding agreement that prohibits the buyer from discussing information about the business to outsiders. The letter also serves to keep the seller from talking to or negotiating with other potential buyers during this time. The letter then allows the buyer to do a more thorough evaluation of the business and for negotiations to continue.

What is a stock sale liability?

For purposes of liability, the “owner” of the business may not have actually changed even though the majority stockholder is new.

When to use "lawsuit" in Google?

When a business owner is pressed for time, it’s in their best interest to Google a potential purchase with the term “lawsuit” as well, in quotation marks. This can notify you when a certain enterprise is facing scandals, a ruined reputation, or violation of regulations.

What is a lien on a property?

A lien is a recorded interest in assets such as real property, business equipment , fixtures , etc. If the seller of the business has a debt that they owe to a third party, that third party can put a lien on the particular property so that when it is sold they will get the proceeds.

Is a sham sale a fraud?

If the purchase was a sham from the start, for example, and it was done only to hide or illegally transfer assets to avoid debt holders, the sale is usually considered fraudulent and treated as if it never happened. This means that whatever you purchased was not yours, to begin with.

What does "put it in writing" mean?

“Put it in writing” is always good advice with contracts, and it applies to discuss what you will not be taking on as well as what you will be taking on in a purchase.

Do buyers have to do due diligence?

In other words, the law expects that the buyer will have done their due diligence and knows what they are getting, warts and all. However, some buyers simply do not have the resources to do in-depth research. Others lack the basic knowledge that this is something very important to investigate.

Preliminary Negotiations & Discussions

• At this stage, the buyer does its investigation of the seller to determine the value of the business or assets it is buying. This usually involves an extensive review of the seller's finances and assets so the buyer can make its own determination regarding value. How much due diligence the buyer does will depend in part on whether it's a stock or an asset sale. More due diligence is required i…

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Formal Agreement & Pre-Closing

Closing

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