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Home / Services / Calculators / Newsletter / Archives Purchasing a Business Many taxpayers find purchasing an existing business to be easier than starting a new business from scratch. This can be done by purchasing the stock of the business or by purchasing the assets. If the stock is purchased, the new owner assumes all of the tax liabilities of the seller. If the assets are purchased, in most cases the liabilities of the seller are not transferred to the buyer. In Ohio, Personal Property Taxes and Sales Taxes owed by the seller may become the responsibility of the buyer. If the seller underpaid these taxes, either intentionally or unintentionally, the state of Ohio can require the buyer to pay them. This also includes a use tax liabilities the seller may not have realized that he owed. The transfer of these liabilities can be avoided by obtaining a Sales Tax Release and a Personal Property Release from the state. Real Estate Taxes are attached to the real estate. Any unpaid real estate taxes an liens will become the responsibility of the new owner if not paid by the time the property is transferred. The use of a good, qualified escrow agent can resolve these issues. Product Liability Lawsuits and Warrantee Liabilities may be acquired with the purchase of a Trade Name or Trademark. Also, the sale contract should require the seller to indemnify the purchaser for any additional liabilities. Anyone considering the purchase of an existing business should consider these issues when negotiating the price and terms of the contract. Qualified accounting and legal advice is a must to avoid these potential disasters that are just waiting to destroy the unwary purchaser.
(August, 2003 Newsletter)
James E. Newland, CPA 939 Center Road Eastlake, Ohio 44095 440-951-9799 |
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