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:

1. What is the nature of my product or service and how will I distinguish my business from my competitors?
   
   
2. 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?
   
   
3. What regulations apply to my business such as occupational licenses, alcoholic beverage licenses, zoning laws, lottery licenses, environmental requirements?
   
   
4. What leasing or property purchase arrangements should I make?
   
   
5. What record keeping will I need?
   
   
6. 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

1. Occupational Licenses. These are issued by each city and county to permit businesses to operate within their boundaries.
   
   

   Seminole County	407-665-7639
   Orange County	407-836-5650
   Orlando	407-246-2204
   Altamonte Springs	407-571-8116
   Apopka	407-703-1704
   Casselberry	407-262-7700 Ext. 5
   Kissimmee	407-518-2120
   Lake Mary	407-585-1415
   Longwood	407-260-3442
   Maitland	407-539-6265
   Oviedo	407-977-6027
   St. Cloud	407-957-7224
   Sanford	407-330-5660 or 407-330-5556 or 407-330-5557
   Winter Park	407-599-3237
   Winter Springs	407-327-1800, Ext. 2

   
   Each county and municipality has zoning regulations. Make sure your business meets these regulations.
   
   
2. 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 protected tradenames.
   
   
3. 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 407-648-6476. 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 I-9 (immigration).
   
   
4. 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 623-1141.
   
   
5. 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.
   
   
6. 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.
   
   
7. 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.
   
   
8. Special Permits or Licenses. Many businesses require special permits or licenses. Some examples are as follows: Hotels and Restaurants 407-245-0770; gasoline dealers 407-623-1141 or 1-800-352-3671; alcoholic beverages 407-245-0785; day care centers 904-488-4900 or for Orange and Seminole Counties 407-245-0470; 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 407-249-6571.
   
   
9. 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 each choice.
   
   

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 relationships, etc.).

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.

Conclusion

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 to you.