If you are looking to sell your small business in the state of California, here are a few things you need to consider.
#1 Proper Valuation of the Business
Before you can sell your company, you need to have a general idea of what it is worth. It’s going to come down to things such as annual revenue, any existing liabilities, current assets, and the value of any intellectual property that will be part of the sale.
#2 The Terms of Purchase
This documents a purchase price, the terms involved in any financing, the terms of any guarantees on the part of the seller, and the terms of any commercial lease the business has. You can transfer commercial leases by subleasing the property with the buyer or by having the buyer enter into a new agreement with the landlord.
#3 Inspection and Diligence
The buyer now has time to look at the books including the company’s financial records. He or she may contact vendors, customers, suppliers, etc. to ensure the necessary ongoing business relationships following the sale.
#4 Sale Documentation Checklist
When the sales documents are written up, there are many things that need to be included, such as:
- Buyer and seller names
- Purchase price
- A closing date
- Competition or confidentiality agreements
There are many other details that should be included before the papers are finally signed, and it is important to have a business lawyer involved.
#5 Post-Sale Cleanup
There are a few other things you have to close down after the sale of your business is completed.
- Send final forms to the Employment Development Department (EDD) within 10 days.
- Let the Board of Equalization (BOE) know in writing that you are selling your business. This cancels your seller’s permit. The California BOE has a 10-page document on how to close out your account properly.
- Close all business bank and credit accounts.
Again, a business attorney can be invaluable in helping you to complete all of the paperwork properly.
Pokala Law is a small business that supports small business whether you are starting a new business, buying a business from someone else, or selling your own company. Call 844-695-1487 today to find out what we can do for you.