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What Are the Top Legal Considerations When Selling Your Business?

To sell a business is one of the biggest decisions in your entrepreneurial journey, so it should be carefully thought through. Whether it’s your first business sale or you have sold businesses several times, it’s advisable to consult with experts and analyze all the legalities for the transaction.

Consider the following legal aspects when selling a business:

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Know and Understand the Type of Business Sale

The legal implications change with the type of business. Therefore, you should first know and understand the type of business sale. Typically, most businesses fall into the categories of sole proprietorship, partnership, LLC, S corporation, or C corporation (among others). You should know how your business is legally organized/classified to determine its legal requirements and repercussions.

Ownership and Liability Laws:

Selling your business means transferring your ownership, which is an important step in the business sales process. Ownership cannot simply be transferred to a buyer upon receiving payment for your business; instead, you must adhere to the legal rules for transferring ownership.

Similarly, you should be aware of your business liabilities, as you cannot walk away from them. The sale contract typically contains contractual seller obligations to the buyer regarding complete disclosure, honesty, responsibility, and indemnification.

Taxation and Compliance on Sale:

When selling a business, tax considerations must be considered. The taxes include capital gains tax, ordinary income tax, recapture of depreciation, investment gains, and other taxes attributable to the seller.

As an owner, you should follow all the rules and regulations set by applicable government bodies to sell your business. Thes can include the IRS, state comptroller, sales and use tax, motor vehicle transfer taxes, and others.

Contracts with Employees and Employment:

A business sale is incomplete without a contract. Other than seller’s and buyer’s contracts, there can be employee and employment contracts. Every detail should be mentioned in the contract according to the applicable rules, safeguarding employees (and the company) in the future.

If the employees are not considered during and after the business transaction, the process might not be completed legally and could face incremental tax, penalty, or liability consequences.

Non-compete Agreement:

A non-compete agreement is a critical undertaking when selling a business. Under this agreement, the sellers make a promise not to engage in a similar type of competing business within a given geographical region over a period of time. Also, the sellers are not allowed to disclose any trade secrets about the business that is being sold. The non-compete can also include non-solicitation provisions specifying that the sellers cannot hire or do business with employees, customers, and suppliers.

The non-compete agreement includes multiple terms and conditions. These details should be clearly outlined according to legal requirements to avoid misunderstandings between the parties.

Legal Issues After Sale:

You are not entirely free after selling your business and transferring ownership. There are still several post-sale considerations to ensure an easy exit. You should define your business exit strategies while considering the needs and expectations of your buyer. 

It’s crucial to address legal issues after your exit to ensure a smooth transition and help you move on to your next endeavor, or retirement, whichever is your goal.

Summary

Selling a business is a highly regulated process, and you cannot afford to ignore its legal aspects. If you find managing the legal aspects of your business sale challenging, consider seeking help from experienced professionals.

If you are looking for “business brokers near me” in Dallas, contact Adam Noble Group.

 


NOTE: The sale of a business is confidential and discreet; PLEASE DO NOT VISIT THE BUSINESS OR SPEAK WITH ANY EMPLOYEES. We know about many businesses that are for sale but might not be advertised. Check out www.adamnoble.com for more information and consider registering your criteria as a purchaser.

ALL STATEMENTS, FIGURES, AND VALUES ARE SUBJECT TO A PROSPECTIVE PURCHASER’S DUE DILIGENCE. THE INFORMATION FURNISHED BY M&A ADVISOR ABOUT THE BUSINESS AND ITS FINANCIALS HAS BEEN PREPARED BY OR IS BASED UPON REPRESENTATIONS AND INFORMATION SUPPLIED BY THE SELLER. ADVISOR HAS MADE NO INDEPENDENT INVESTIGATION OR VERIFICATION OF SAID INFORMATION.


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For information, reference Texas Renovation-Rehab Multifamily Construction Services Business for Sale Business for Sale 20456 and contact Jeff Adam, PE, MCBC, FRC, CBB at Adam Noble Group, LLC
Phone: (817) 467-2161

Are you looking for a buyer? Search other buyers at SEARCH OUR BUYERS, email or call us to discuss your opportunity. It may fit another active buyer’s search criteria. Thinking of selling:  Contact us TODAY to Sell your Business 

For 3 decades, we have been guiding business owners and their families CONFIDENTIALLY to exit their construction trade business with the BIGGEST paycheck of their life!

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