Law Office of:
Steven R. Kutner, P.A.
260 Lookout Place, Suite 205
Maitland, Florida 32751
Tips on Buying & Selling a Business in Central Florida:
Know Your Business
Many questions in the start up or purchase of a business are
not of a legal nature. However, experienced legal counsel often
has the business experience to provide answers to such questions.
In the start up of a business, you must ask yourself:
- What is the nature of my product or service and how will I
distinguish my business from my competitors?
- What are my start-up expenses, including lease deposits, utility
deposits, remodeling costs, equipment costs, supplies, taxes,
permits, licenses, professional services (attorney/CPA), advertising
and start-up employee salaries?
- What regulations apply to my business such as occupational
licenses, alcoholic beverage licenses, zoning laws, lottery licenses,
- What leasing or property purchase arrangements should I make?
- What record keeping will I need?
- How do I set my prices and project my sales and expenses, and
what are my options if I fail to meet these projections?
A Checklist Of Some Important Legal Requirements For Starting Or
Purchasing A Business
- Occupational Licenses. These are issued by
each city and county to permit businesses to operate within their
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Each county and municipality
has zoning regulations. Make sure your business meets these regulations.
- Fictitious Name. Unless you plan to do business
under your exact legal name or the name of a Corporation you
will have to register a "Fictitious Name." Your attorney has the
necessary forms for these purposes. There are serious penalties for nonregistration.
If you intend to do business as a corporation, form the corporation first.
The corporation will then be the filer and owner of the fictitious
name. Publishing a fictitious name gives you the right to use
it at the location registered but it doesn't give you the exclusive
right to do so. It is advisable to make sure you are not using
- Federal Tax ID Number. Every business entity
must have a Federal Taxpayer's Identification Number. It is the
equivalent of a Social Security Number for businesses. The State
requires one for each corporation and banks require one to open
an account. Once you have your location and business name (or
you've formed your corporation) you apply for a tax number by
obtaining and filling out an IRS form SS-4. You can get one from
the IRS, an accountant or your lawyer. Once you have completed
the SS-4 you can mail or fax it to the IRS or you can obtain
a tax number by telephone. The IRS has information and workshops
on the preparation of small business taxes. Call 800-829-1040.
SCORE (Service Corps of Retired Executives) can also assist.
Call 407-470-4844. The IRS will send you a federal employment
tax package when you obtain your EIN #. This package also contains
the necessary forms for employees such as W-4 (withholding) and
- State Sales Tax Number. If you buy or sell
articles for resale you will need a State Sales Tax Number. It
will also allow you to buy goods for resale without paying sales
tax. It is the number by which you will report sales monthly
on which state sales tax must be collected. You may apply at
the State Department of Revenue 407-623-1141.
- State Employment Forms. The State of Florida
will send you a package of forms relating to unemployment insurance,
which the employer pays, not the employee.
- OSHA. You will get an information pamphlet
from the Occupational Safety and Health Administration. If you
need added information you can order it following directions
in the information pamphlet.
- Worker's Compensation Insurance. Most employers
are required to purchase this insurance to cover injuries on
the job. There are methods for "opting out" of this
insurance for small employers. Discuss this with your legal counsel
as it is a significant legal decision. Coverage can be obtained
from any commercial insurance agent.
- Special Permits or Licenses. Many businesses
require special permits or licenses. Some examples are as follows:
Hotels and Restaurants 850-487-1395; gasoline dealers 407-623-1141
or 1-800-352-3671; alcoholic beverages 407-245-0785; day care
centers 850-487-1111 or for Orange and Seminole Counties 407-317-7820;
motor vehicle repair, telemarketing, travel agents, health clubs
1-800-435-7352. In the event the business must be operated by
a licensed professional, each profession has a board under the
control of the Department of Business and Professional Regulation
- Choosing the Form of Entity. You must determine
the legal structure of your business. Some choices are: sole
proprietorship, corporation (S or C type), partnership, limited
liability companies. Most businesses are operated as corporations.
The primary purpose of doing business through a corporation is
to limit liability. In many cases, if the corporation incurs
debts or obligations, or an employee of the corporation owned
business causes damage to a third party, the corporation is liable,
not the owners of the corporation. Thus, by forming a corporation
to do business, you may protect your individual assets from creditors.
Your attorney will discuss the advantages and disadvantages of
Purchasing a Business
Purchasing an existing business is unlike buying a home. In purchasing
a home you are able to view the home in an hour or less, obtain a title
search to make sure the title is clear, and obtain an appraisal with
your mortgage to make sure you are getting the value for your money.
In purchasing a business, you are unable to cursorily view the business.
Not only must you view the physical attributes of the business, you
must research and review the historical financial documents as well
as assess the "intangibles" of the business (i.e. employee
relations, necessary licenses, customer relations, landlord and supplier
Sellers sometimes suggest buying their corporations. However, a buyer
of a corporation also accepts any corporate liabilities along with
the assets. Such liabilities can include trade payables, personal injury
claims, tax liabilities, employee claims, etc. Even if a seller appears
to be trustworthy, the seller may not even be aware of some of the
liabilities. Oftentimes, the only rationale for the purchase of the
corporation is to avoid the need to transfer certain licenses and leases
associated with the business. However most of the time it is usually
in the buyer's best interest to buy only the assets and let the seller
keep the corporation and its potential liabilities. The Buyer can then
form his own corporation to run the business.
A business is like real estate in that some of the assets may be subject
to mortgages or liens recorded in the public records. There may be
tax liens against the owners that will encumber the business assets.
Personal property taxes, sales taxes and employee withholding taxes
may be delinquent or due. In the event the business owns real estate,
a title search is often recommended. Your attorney can perform a public
records search to help disclose these potential problems.
The most important document in any transaction is the purchase agreement.
A business may be owned by partners or a corporation in addition to
the person behind the counter. It is important that everyone who has
an interest in the business sign the purchase agreement.
The contract will contain the financial aspects such as the purchase
price, deposits, and the terms of payment of the balance of the price.
Sometimes the seller has a note due a previous seller that the buyer
will assume. In such cases it must be established that the note is
not in default, the balance due and that the consent of the previous
seller is forthcoming. The contract must contain all necessary contingencies
such as transferring of licenses, landlord approval, financial records
review, environmental testing. The equipment and pending contracts
of the business must be specified. These are only some of the concerns
to address in the drafting of this most important document.
Oftentimes a business broker is involved in a transaction. Business
brokers are an important consultant in any transaction. However, they
would agree that only you, your attorney and accountant are solely
looking out for your interests.
After the contract is signed, you are permitted the opportunity to
further investigate a business. This is called the "due diligence" period.
Your attorney and accountant can suggest many areas of necessary investigation.
Once you have satisfied yourself that you are making a wise investment,
the transaction is scheduled for closing. The closing documents are
prepared by a closing attorney or by your or the seller's attorney.
One attorney can act as your attorney and the closing attorney with
the knowledge and consent of the Seller.
By following the above guidelines and with use of experienced legal
counsel you will likely be satisfied with the success of your start-up
business or business purchase. Let us know if we can be of assistance