Buying a Business in New York
Buying a business in New York can be a daunting task. There are numerous steps and research that an entrepreneur has to take before the actual purchase; otherwise they could find themselves in a lot of trouble. Restaino Law, LLC has years of experience in the purchase and sale of all types of businesses in New York and can ensure you don’t fall into some of the hidden pitfalls that can happen in these types of transactions.
To purchase a business the buyer has to go through a number of steps. The first is what is known as the “Due Diligence” period. During this time the buyer and their attorney should be reviewing the existing business’ documents and the condition of the business’ assets to confirm that the business is in good standing and to determine the price the buyer will pay. The buyer should do a thorough review of the business’ tax returns and financial statements to get an idea of the gross income the location currently generates and make a decision whether or not this business purchase is a good idea. The buyer and their attorney should also be requesting and reviewing the business’ current lease and begin a dialog with the seller’s landlord to see if the lease can be assigned or extended and what the expected lease terms will be. The purchase price of the business should reflect the lease and the landlord’s cooperation with the business sale.
After the business’ documents have been reviewed and a final decision to purchase the business has been made the buyer and seller will enter into a contract. This contract must correctly identify the structure of the sale and the assets being transferred. The contract needs to state exactly what assets and equipment is going to be included in the sale. The contract must also specifically delineate the responsibilities of the buyer and seller before and after the closing takes place. Not doing a thorough review of the contract terms can be devastating to a buyer and can financially ruin a new business before it even opens.
Under certain circumstances for businesses that pay sales tax New York State has an additional requirement that the buyer must send notice of the sale to the New York State Tax commission by registered mail at least 10 days before taking possession of the business assets or paying the seller. The failure to notify the New York State Tax Commission or not complying with their requirements for the sale can mean that the buyer can be responsible for paying any unpaid sales tax the seller owes. New York State will have no sympathy on a buyer who does not know this requirement or relies on the seller’s statements that no sales tax is owed.
After the contracts have been signed and all required New York State notices are sent the closing will occur. Before closing a thorough review of all the proposed closing documents should be done; especially any promissory notes or documents that have post-closing obligations for either the buyer or the seller. At the closing after all of the documents are executed the keys will be handed to the buyer and the buyer can start working on their business.
Anyone purchasing an existing business will be making one of the most important investments of their life and they need an attorney who can protect them and guide them through this complicated process. Alexander Restaino has the knowledge and experience to ensure that you are not entering into a bad deal and setting your new business for failure before you even start operating. Contact us to set up a free consultation to discuss your potential business venture.