Selling a Business: Sole Proprietorship
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
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