Is it time to sell your small business? Maybe you’re ready to close up shop and retire or maybe you’ve been offered a price that’s too attractive to refuse.
Either way, you need a contract that covers the sale. Make certain these things are included:
1. Identify the parties involved.
Include aliases that are used and the name of the business that the parties hold. It’s also important to include each individual’s proper title in his or her business. For example, you might be listed as “sole proprietor” of your business and the buyer might be listed as “chief executive officer” of his or her company because of the way that company is legally organized.
2. Itemize everything that’s part of the sale.
It is important to be highly specific about exactly what is being sold. Are you selling the name of the business? What about the logo? If you are a candy store or a bakery, are there any recipes that are being sold with the business? Misunderstandings in this area can come back to haunt both buyer and seller.
3. Include a list of liabilities that go with the business.
Your buyer is likely also buying your business debts. However, if you forget to include those debts in the sale papers, you could be stuck with them once the deal goes through.
4. Make sure you disclose any hidden issues or problems.
This is another area of concern. You want to make sure that the buyer is aware of any obligations, potential lawsuits or unpaid taxes that might not be obvious. Not disclosing something that you are aware of that’s a potential liability could open you up to a lawsuit.
5. Discuss restrictions that could affect the future.
This is a rather broad category but, today, it often includes restrictions on intellectual property and non-compete clauses that keep you from taking what you know about the business and starting a new store up in a nearby location.
Handling a sales contract for a business is a difficult proposition. For that reason alone, it might be wise to seek legal advice in order to prevent future contract litigation.