What to check before Buying a Business. Buying a business can be an exciting and fulfilling experience, but it is also one of the most important decisions you will make in your lifetime. Buying a business comes with big responsibility and requires careful consideration. This article provides insight into what you need to know when buying a business, from due diligence to broker fees, so that you can make an informed decision about whether or not this is right for you. Learn more here.
Here are some things to check before Buying a Business.
- Legal obligations of the business you are buying, including all leases and contracts with employees or other companies
- Taxes that need to be paid on the business purchase price as well as taxes owed by the company itself (e.g., payroll tax)
- Expenses related to purchasing inventory or equipment for your new business’s location(s), if applicable
- Owner contributions made toward retirement accounts such as 401k plans, pension funds, etc., if applicable
- Liability insurance covering workers’ compensation claims against your new business upon purchase of its assets from another entity. You will also want to confirm whether any lawsuits have been filed against it in recent years
- If the company is a corporation, you will need to check with your legal counsel whether it has filed its annual report and paid franchise taxes – These are typically due April 15th of each year. You may also want to check if there are any outstanding tax returns that have not been submitted for filing by the business owner(s) before closing
- Depending on where you live (e.g Some states require this), verify that all necessary documentation is in place so that after purchase, your new business’s name can be registered as an assumed or fictitious name within the state upon submission of appropriate forms. Learn more about A Complete Guide to Buying a Business.