Are you thinking about buying a small business? It’s an exciting prospect, but it isn’t without its legal considerations.
Before taking the plunge and becoming a new business owner, make sure to understand all of the legal implications involved in doing so.
From reviewing the purchase agreement to getting professional help, this article will walk you through each step of the process and offer tips on navigating the potential legal pitfalls along the way. If you need more help, contact a Wilmington business lawyer at Johnson Legal.
One of the most crucial legal considerations when buying a small business is the purchase agreement. This document outlines the terms of the transaction and is legally binding for both parties. Before signing the purchase agreement, it’s crucial to have an attorney review it to ensure that everything is legally sound and fair to both parties.
The purchase agreement is a negotiable document. Therefore, both the buyer and the seller should engage in good-faith negotiations to ensure that the terms of the agreement are favorable for both parties. This includes discussing the purchase price, payment terms, and any contingencies.
Here are some of the different types of purchase agreements:
It’s essential to understand the different types of purchase agreements and to choose the one that best fits the needs of both the buyer and the seller. It’s also important to have an attorney review the purchase agreement to ensure it is legally binding and fair to both parties.
Legal due diligence is also essential when buying a small business. This process involves reviewing contracts, licenses, permits, and other legal documents to ensure that everything is in order.
Investigate any legal disputes or claims against the business before finalizing your purchase. This is crucial in order to determine if there are any potential risks that could come with buying a small business.
It may be beneficial to consider:
By doing thorough research into these areas, you can make sure that there aren’t any lingering legal issues associated with the prospective company.
Taxes are a significant consideration when buying a small business. It’s essential to understand the acquisition’s tax implications and work with an accountant to ensure everything is done correctly.
Sales tax is a significant consideration when buying a small business. If the business sells products or services, there may be sales tax implications. It’s crucial to work with an accountant to ensure that the correct sales tax is collected and paid.
Income tax is another significant consideration when buying a small business. It’s essential to understand the tax implications of the acquisition and to work with an accountant to ensure that everything is done correctly.
Contracts are an essential consideration when buying a small business.
It’s crucial to understand any existing contracts and to ensure that they are legally binding:
It’s also essential to review the terms and conditions for each contract and look out for any clauses or provisions that could affect your ownership rights or obligations when you take over.
Licenses and permits are another essential consideration when buying an existing business. It’s crucial to review any existing licenses and permits and ensure they are up-to-date and legally binding.
If the business requires any business licenses, it’s essential to ensure that these are up-to-date and legally binding. This includes reviewing the terms of the license, such as renewal dates and fees.
If the business requires any permits, such as building permits or health permits, it’s crucial to review these as well. This includes ensuring that the permits are up-to-date and legally binding.
Intellectual property is another critical consideration when buying a small business. This includes reviewing any existing patents, trademarks, or copyrights and ensuring that they are legally binding.
Here’s a general overview of each:
Review any existing patents, trademarks, or copyrights to ensure that they are legally binding and up to date. Failure to properly review intellectual property could result in unexpected legal issues and expenses down the line.
When buying a small business, it’s crucial to seek the advice of experienced professionals, such as lawyers, accountants, or business consultants specializing in acquisitions. They can help structure the sale agreement, provide insights into potential legal risks, and review existing contracts and documents.
At Johnson Legal in Wilmington, NC, our team of business lawyers can guide you through the acquisition process and ensure all necessary paperwork is completed correctly. With our expertise, you can make informed decisions and confidently move towards completing the sale and transferring ownership. Contact us today to discuss your acquisition needs.
Shane T. Johnson is the CEO and Managing Partner of Johnson Legal, an estate planning and business law firm in Wilmington, NC. With years of experience in estate and business law, he has zealously represented clients in various legal matters, including small business formation and purchasing, estate planning, probate, domestic violence, and other legal cases.
Shane received his Juris Doctor from the University of Wyoming and is a member of the North Carolina Bar Association. He has received numerous accolades for her work, including being named among the Best Probate Lawyers in Wilmington by Expertise.com.
