A Few Legal Things To Consider When Purchasing A Business
Running your own business allows you to provide for your family while being independent from an overseeing boss. However, being a business owner requires a lot of hard work and might require you to deal with some legal issues at some point or other. It is important to prepare yourself for these situations and to understand the kind of legal problems you could run into as a business owner. Purchasing a business is a major commitment so take note of the following and then seek legal advice from a North Shore lawyer when buying a business.
Due diligence is a term used to refer to the research you have to conduct before purchasing a business. Buying a business from its previous owner can seem like a great way to get started but you should not purchase the business until you know more. Do some thorough research to gain a better understanding of the business’ finances, current contracts and legal obligations. Do not hesitate to get help from an accountant or a lawyer.
Ask if you can see the business’ lease. Go over it carefully to make sure the lease can be transferred over to a new buyer. If the lease does not state that it is transferable, you will have to sign a new one once you purchase the business.
You need to put together a detailed contract with the previous owner. The purpose of this contract is to clearly state what is being sold. You can purchase a business as an entirety or purchase the assets linked to that business. This second option means you are not obligated to fulfil any legal obligations or pay back any debt contracted by the previous owner.
If you are purchasing the assets of a business instead of buying the entirety of a business, you will have to register your new business as a legal entity. Forming a Limited Liability Company is often the best option for small business owners but another approach might be more relevant in your situation. Consult a North Shore lawyer for buying a business to learn more about your options and to have a professional register your business as a legal entity for you.
You should also get help from a lawyer to create a detailed sales agreement with the seller. It is best to create a letter of intent to put in writing what you and the seller have agreed to. The letter of intent is not a binding legal agreement but creating this document is usually a good way to sum up the terms of the transaction.
The sales agreement is a legally-binding contract that needs to be written by a qualified lawyer. Don’t hesitate to negotiate before putting together a sales agreement. Take the time to assess the real value of the business you want to purchase to make sure you are not overpaying.
Purchasing a business has some strict laws and obligations in regards to the employees of the business. It is often not easy to eliminate staff simply because you are the new owner. The employees have rights so be sure that you understand your obligations before you commit to any agreement. The safest bet is to talk to the lawyers handling the purchase of your North Shore business for advice on employees and employment law. It is very complicated.
You should purchase insurance for your new business if the policy purchased by the previous owner was not transferred. Look for a policy that covers you in a number of scenarios, including legal problems with employees or with clients. You should also look into hiring a business lawyer like McVeagh Fleming Partners so that you have someone to turn to if you encounter legal problems in the future.
It is important to learn as much as possible about the business buying process before you become a business owner. Get help from a lawyer who has experience with similar situations.