SMALL BUSINESS PLANNING
SMALL BUSINESS FORMATION
When forming a business, you can choose to operate as a sole proprietor or a partnership, however, many small business owners choose to operate as a business entity. There are several benefits to operating as a business entity including better asset protection, flow-through taxation, decreasing personal liability, greater degree of anonymity, and business credibility.
Choosing the right entity for your business to operate under is important to gain the most tax benefits and maximum liability protection. Having an attorney create the appropriate documents for the formation of your business is of the upmost importance. The following is a list of viable business entity options:
- S Corporation
- Professional Corporation
- Limited Liability Company
- Series Limited Liability Company
- Limited Partnership
- Family Limited Partnership
There are many website companies that create business entities, but having an experienced business attorney advise you on the correct business entity for you type of business is important to avoid issues down the road.
SELLING A BUSINESS
Selling a business usually requires a purchase-sale contract, a due diligence period, and a closing. Other documents that may be used in the sale include bill of sale for personal property, deeds for real property, non-compete agreement for the seller, and UCC (Uniform Commercial Code) forms.
Assets of a business may or may not be included with the sale of a business. Buyers typically prefer to purchase just the assets of a business versus the entity itself. Purchasing just the assets reduces the risk of purchasing the entire entity which can include undisclosed liabilities. Although, advantages of purchasing the entity my include business lines of credit, a good credit rating, and existing vendor accounts.
Due Diligence Period
Due diligence period is the period where a buyer has the opportunity to review the records, operations, and all the aspects of the business they are purchasing. Procedures performed during due diligence period may include:
- Facilities Inspections
- Financial Audits
- Accounting Audits
- Tax Return Audits
- Shareholder, Partner, or Member Involvement
- Customer & Vendor List Inspection
- Applicable Licensing & Regulatory Checks
- Environmental Tests
- Closing of the Sale
Closing is a date when all the documents are signed for the purchase/sale of a business. If the sale involves real property, the closing will typically be at a title company. If no real property is involved, the closing will typically be at an attorney’s office.
Using a Business Attorney
Due to the intricacies of a business sale/purchase, it is important to see the advice of an experienced business attorney. To schedule a consultation, please contact us today.