ForumsStarting a Business

Up to All Forums

This Question is Answered

3 "helpful" answers available (4 pts)
Post a new topic
3 Replies Last post: Jun 30, 2008 11:21 PM by Lighthouse24

How do I know I am buying a business from the real owner?

Jun 30, 2008 10:03 PM

Click to view PingPing's profile Professional PingPing 6 posts since
Jun 2, 2008
Hi,

I am curious what kind of document would prove that the person you want to buy a business from is the ownership? (the real owner). Are Business License and Tax ID enough to prove ownership of the business? (if business is sole proprietorship)
Tags: Report as inappropriate
Click to view Lighthouse24's profile Mogul Lighthouse24 2,396 posts since
Oct 10, 2007
1. Re: How do I know I am buying a business from the real owner? Jun 30, 2008 10:44 PM

Your profile mentions Tennessee. There (and in most states) if you buy a sole proprietorship, you are only buying the physical assets that the owner is handing over to you. The current owner is required to close out the business license, close all business bank accounts, cancel the sales tax and use permits, and so on -- and you as the new owner are required to start from scratch obtaining all appropriate licenses, accounts, permits, etc. under your name.

If you intend to keep using the current trade (DBA) name of the business (plus any signs, logos, trademarks, or other intellectual property that may go with the name), my suggestion would be to consult an attorney to make sure that you get the rights to use all of that (and that the current owner is obliged to file whatever forms or releases are necessary on his side to enable that to happen) -- because, again, you DON'T automatically get all that in the deal when you buy a sole proprietorship there.

Hope that helps. Good luck with your new endeavor!
Report as inappropriate
Click to view PingPing's profile Professional PingPing 6 posts since
Jun 2, 2008
2. Re: How do I know I am buying a business from the real owner? Jun 30, 2008 11:07 PM
in response to: Lighthouse24
Lighthouse24

Thank you so much for your reply! One more thing I would like to ask if you don't mind: would unpaid bills from previous owner be new owner's responsible legally?
Report as inappropriate
Click to view Lighthouse24's profile Mogul Lighthouse24 2,396 posts since
Oct 10, 2007
3. Re: How do I know I am buying a business from the real owner? Jun 30, 2008 11:21 PM
in response to: PingPing

No, the current owner is legally responsible for all debts incurred by conducting business, and is personally liable for all actions undertaken in the name of the business, until he/she files the paperwork to close it out. (A sole proprietorship has no legal identity of it's own -- in the eyes of the state, the business and the registered owner are one-in-the-same.)

If you were continuing to do business under the same name, the previous owner's suppliers or creditors would probably hassle you anyway if they were owed money (they'd try to use you to get to him/her) -- and if you needed those suppliers, things could get difficult. Yet you wouldn't be legally obligated to pay them money that he owed.
Report as inappropriate

More Like This

Most Recent Forum Posts

Home Based Data Entry      
2 minutes ago

Happy Thanksgiving
35 minutes ago

Increasing your site conversion rates by up to 300%.
57 minutes ago

Starting a temporary staffing agency
1 hour ago

Legend

  • Open Question
  • Answered Question
  • New content since your last visit
  • Updated content since your last visit
  • Content you have read