The Legal Procedure of Purchasing a Business

Business Entity Formation-  Forming the the legal entity of the corporation which entails choosing which type of entity best suits your needs  from both a legal and tax perspective. The most common are the C-corporation, S-Corporation and Limited Liability Company (LLC)

Contracts:
The process starts by identifying your objectives and developing strategies to alleviate your concerns in regard to the business transfer.

Letter of intent:

This is the agreement to buy the business. This document states the price that you are paying for the business and the specific assets of the business you are buying. It also should include the allocation of the price among the various assets included in the sale. This is an extremely important point for tax purposes.

It benefits the seller if the letter of intent is as strong as possible and prevents the buyer from canceling the purchase under any conditions and receiving a refund of the deposit.

The buyer interest is the inverse of the seller and it serves the seller interest to have as many reasons for the buyer to cancel the purchase included in the contract as possible.
It is important that all the points are agreed upon and written into the contract to avoid disputes further in the acquisition process.

Escrow Agreement:

The deposit is usually placed in an escrow account with an escrow agreement listing the conditions which must be met for the funds to be released.

Assignment and Assumption of Asset Agreement

Bill of Sale

Promissory note