Selling Your Business

Hot Topics

Need Some Deductions for 2012?

Don't overlook these!

10 Oddball Tax Deductions

11 Most Overlooked Tax Deductions

Summary of Federal Tax Law Changes for 2010 - 2017

Learn about the tax changes scheduled to come into effect through 2017 and how you could be affected.

Updated for 2012

Selling a Business: Sole Proprietorship

<< Previous

Selling a Sole Proprietorship (Continued)

Your attorney may prepare a variety of documents, some of which may include:

A sales contract:
- Contains rights and obligations of parties to the contract.
- A conditional sales contract may be prepared whereby you, the seller, retain legal title to property transferred until the installment collections are completed.
Promissory note:
- If it's an installment sale, a promissory note will have to be prepared indicating the payment terms. For example:
  - The amount to be financed.
  - The interest rate.
  - When payments will commence.
  - The number of payments to be made.
  - Frequency of payments (weekly, monthly).
Security agreement:
- Contains a description of all property included in the sale.
- You, as the creditor, have a secured interest in all property included in the security agreement.
- You generally have no security interest in property not included in the security agreement.
- Gives you the right to repossess property if purchaser defaults.
Financing statement:
- Perfects your security interest in property. In other words, if rival creditors make claims against the same property, you will have a superior interest.

Generally the above documents are typically prepared when selling a sole proprietorship.

However, there may be other documents required to complete the transaction depending on the rules of your state. A competent attorney will guide you through the process.

Selling Your Sole Proprietorship: The Role of Your Accountant

Next >>

Selling Your Business

More Tax Topics

Quick Links