|
OVERVIEW: In some instances, it may be better for you to purchase an existing business rather than start a new business. There are numerous advantages to purchasing an existing business, including the fact that all the preliminary work has already been done. An existing business should have a tax identification number, bank account, and all necessary city, county, and state licenses. On the other hand, there are also some risks in purchasing an existing business, namely the business may have certain debts that you do not want to incur or contract obligations that you do not like.
In order to protect your interests and assess whether buying an existing business is right for you, a thorough review of the business, its assets, debts, and contractual obligations must be conducted. For example, one of the most important contracts to review is the lease for the business space. You may find that the landlord’s permission is needed in order to continue with the lease after a sale of the business. The process of reviewing a business prior to purchase is called due dilligence review. After you have conducted your due dilligence review, you will need to decide if the business is right for you and if so, whether you will purchase the shares in the business or just the assets of the business. If you purchase all shares in the business, you will only need to update the ownership information for the business. For example, almost all business licenses will need to be updated to notify city, county and state officials that there has been a change in ownership. On the other hand, if you only purchase the assets of the business, you will still need to incorporate your own business entity and obtain your own tax identification number, bank account and business licenses. More information on the incorporation process can be found here.
|
