Purchasing a business can be an intimidating process. Whether you are taking the plunge for the first time, or are an experienced entrepreneur, the involvement of a lawyer can significantly lower your risks and provide guidance through the process.
Thinking of buying a business?
If you are thinking of buying a business, there are a few things that you have to consider. At Prudent Law, our goal is to help guide you through the process and ensure that you can focus on your new business, while we take care of the paperwork.
Incorporation or Sole Proprietorship
When you buy or start a new business, you can run your business through a corporation, or in your own name (a sole proprietorship)
The primary advantages of a corporation are limited liability, and tax savings. However, the disadvantage is that you have to pay costs of setting up the corporation and costs for annual resolutions and tax filings.
A third alternative, a partnership, can be valuable when working with a group.
At Prudent Law, we have helped clients buy and setup businesses through all of the above means. We have the experience to be able to guide you to make the best decision for your business and for your success.
Bulk Sales Act and Personal Property and Security Act
When you buy a business, you want to make sure that the creditors and suppliers of the old owner are taken care of and that you are not taking over any loans that yo don’t know about! Hidden liabilities like this can be a major problem for a new business owner and can cause unnecessary strain on your time and resources.
We will perform all the searches and make the filings under the Bulk Sales Act and Personal Property and Security Act to make sure that you are protected from debts of the seller of your business.
Buying a franchised business can be a great way of reducing risk and ensuring long term growth! However, running a franchise means you have to follow the rules and regulations set out by the franchisor.
As the buyer, you will have to sign a franchise agreement. At Prudent Law, we will review the agreement with you and alert you to any concerns.
Asset or Share Purchase
Whether to buy the assets of the business, or the entire corporation, is a question that is frequently asked by potential buyers.
While it is difficult to detail all the advantages and disadvantages of either approach in this article, the most important distinction is hidden liabilities. If you are buying the shares of a corporation, then you are buying everything that comes with it, including any unknown lawsuits, tax arrears, or guarantees. When you buy the assets only, you get the ability to list every item that you are purchasing, preventing issues with hidden liabilities.
How Prudent Law can help
At Prudent Law, we have helped our clients purchase all types of businesses, both big and small. From $25 million + hotels, to convenience stores, to vacant land for development, we have helped with them all.
We can tackle virtually any issue that you may have. Come in for a free consultation and find out!
A Cautionary Note
The foregoing provides only an overview and does not constitute legal advice. Readers are cautioned against making any decisions based on this material alone. Rather, specific legal advice should be obtained.