You’ve just bought a business. Your business broker has handled the negotiations of the essential deal terms and has probably also helped coordinate the due diligence review. Your small business attorney has handled the legal aspects and has reviewed the due diligence documents. At closing, you and the seller have signed all of the documents to buy the business. You had no idea it would be such a process and you’re relieved to be through it all, but there are other important steps that you need to consider.
In negotiating all of the deal terms, reviewing all of the due diligence information, ironing out the closing documents, and getting ready for closing, there are items that sometimes fall through the cracks. While the closing documents legally transfer the ownership of the business to you, the operation of the business needs to be transferred to you, too. And these are the little things that tend to get forgotten in all of the excitement.
In this blog post, we’re sharing a checklist we’ve created so that the operational information of the business gets transferred to you. It’s easier if these things are handled at closing or shortly thereafter.
- Change Passwords. Make sure you get all of the seller’s passwords and log-in credentials. Some of the passwords you may need are: computers, online bank account access, online vendor accounts, software applications, website access, directories, and any other accounts of the business. As soon as closing is over, you should log into each of these and change the password and log-in credentials.
- Bank Accounts. If you keep the same bank account for the business, be sure to go to the bank on closing day and change the signatories on the bank account.
- Utilities. If the business is keeping the same account for utilities, make sure you update the authorized representative. These could include telephone, electric, internet, water and sewer services. Update each account with your new information.
- Vendors. Make sure all of the vendors of the business know that you are now the new owner. This could include cleaning services, water/coffee/paper suppliers, insurance providers, trash removal, HVAC servicers, website providers, advertisers and any other vendors the business may have. You could send them a uniform card or letter notifying each of them of the change of ownership and providing them with your updated information.
- Notify Landlord. More than likely, the landlord has been in the loop and knows you’re buying the business. You may have signed a lease assignment or you may have entered into a whole new lease with the landlord. Be sure to notify them that closing has occurred and make sure they have your contact information.
- Keys. So important but this often gets overlooked (believe it or not). Make sure you get the keys to any office, storage units or post office boxes – and this includes any access codes that are used in lieu of physical keys. You will probably want to get the locks changed and new keys made.
- Accountant. Let your accountant know that you have closed on the purchase of the business and ask him or her what steps need to be done to set up your accounting.
- State Records. You have a legal obligation to keep the business information updated with the State of Florida. Whether you have formed a new entity or have purchased an existing one, you should update all contact information for the business (including addresses). You can do this by visiting sunbiz.org.
- Taxes. If you formed a new entity, you may have registered to pay taxes already. If you haven’t, then you will need to register to pay any taxes that are applicable to you. This could include payroll, unemployment, income and/or sales tax.
While there are many more items that you will need to address when you take over the business, the things on this list are common to most businesses. They are ‘little’ things that carry a lot of importance, so they shouldn’t be overlooked
ABOUT ELEVATE: At Elevate, we maintain an outlook of optimism while being realistic in protecting against what could go wrong. We believe in promoting great relationships between our clients and their clients – and we do that by creating service contracts they can use to demonstrate honesty and build trust.