Closing Checklist

Andy Anderson

It is important during the closing to make sure that you have legal counsel available to review all documentation necessary for the transfer of the business.
The following items should be addressed in a closing:

  • Adjust Purchase Price - This would take care of prorated items such as rent, utilities, and inventory up to the time of closing.

  • Review Documents Required to be Provided by the Seller - These would be a corporate resolution approving the sale, evidence that a corporation is in good standing, or any tax releases that may be been promised by the seller. Check with your local department of corporations or secretary of state.

  • Signing Promissory Note - In some cases, the seller will carry back financing, so have an attorney review any Note documentation.

  • Security Agreements - These documents may be necessary if you are going to finance your purchase. A Security Agreement lists the assets that will be used for security as a promise for payment of the loan.

  • UCC Financing Statements - These documents are recorded with the Secretary of State in the state you have purchased your business. Again, these documents are necessary if you are going to finance your business.

  • Lease - If you have agreed to assume an existing lease, you will be required to execute the assumption. Make sure that you have the landlord's concurrence to assumption of the lease. You may have negotiated a new lease with the landlord instead of assuming the existing lease.

  • Vehicles - If the purchase includes vehicles, you may have to execute the transfer documents for the vehicles. You can check with your local Department of Motor Vehicles to determine the correct procedure and necessary forms.

  • Bill of Sale - The bill of sale will be proof of the sale of the business and will transfer the ownership of the other tangible business assets not specifically transferred on their own.

  • Patents,Ttrademarks, and Copyrights - May need to execute the necessary forms if part of the transaction.

  • Franchise - May have to execute franchise documents if the purchase of the business was a franchise.

  • Closing or Settlement Sheet - The closing or settlement sheet will list all financial aspects of the transaction. Everything listed on the settlement should have been negotiated prior to the closing, so there should be no surprises.

  • Covenant Not to Compete - It is a good idea to have the seller execute this agreement. This will help add to the success of your operation of the business without any interference from the previous owner.

  • Consultation/Employment Agreement - If the seller has agreed to remain on for an amount of time, this documentation would be necessary.

  • Complete IRS Form 8594 (PDF file), Asset Acquisition Statement - This document will indicate how the purchase was allocated amount the various assets. Important for your tax return.

  • Bulk Sale Laws - Make sure that all bulk sale laws have been complied with in the transfer of the business assets.

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