West USA Realty - Scottsdale, AZ

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Pre-Closing Check List For Arizona Business Buyers

Please find below a simple check list of some of the major items that a small business buyer in Arizona should address or consider before the close of escrow on a small business purchase or transfer. Click on the highlighted links for additional info and relevant forms.

• Buyer Due Diligence Completed: Satisfactory Buyer review of all requested information, books, records, tax returns, & financial statements for target business.

• Lien &  Judgment Search: UCC-1 financing statement (Uniform Commercial Code) search  performed on target business to determine whether any recorded liens are in existence against the business or assets of the business. Note: The Escrow company normally provides this (UCC search) service as part of its closing services. View info about Arizona UCC-1 financing statements here

• Lease Assignments: A Lease assignment (or new lease) for the target business premises has been reviewed and approved by Buyer and Landlord.

• Equipment & Fixtures List: Buyer should obtain a detailed list (description, quantity, model year, etc.) from Seller of all equipment and fixtures included in sale.

• Equipment Lease Assignments: Only If applicable to business transfer and terms of purchase agreement. Most businesses will be delivered or transferred free and clear of all equipment leases.

• Business Licenses & Permits: If applicable, Buyer has obtained all necessary permits and business licenses to operate business. Request list from Seller.

• Buyer Incorporation: If incorporation is desired, Buyer has consulted an advisor or accountant to determine best option, or has taken the necessary steps on their own to form a purchasing entity such as an Arizona LLC or Corporation. This information must be forwarded to the Escrow company before closing. View information here from AZ Corp Commission on how to apply and form an Arizona Corp or LLC.

• Federal Tax ID #: The Buyer in most cases should obtain an Employer ID Number (EIN) from the IRS. View information here about how to file for a EIN # or Federal Tax ID number

• Arizona Sales Tax License: If applicable. View AZ sales tax information here

• Assignment Of Target Business Trade Name: If applicable. Click here to print a blank Arizona trade name assignment form. Or, View information about filing for a trade name registration in Arizona here.

• Business Bank Account: Buyer should open a small business bank account in anticipation of business transfer. Federal Tax ID #, and incorporation status or info may be required by the bank before account is approved.

• Business Inventory Check: If applicable, and included in the terms of purchase agreement, Buyer and Seller should arrange inventory check either prior, or immediately after closing.

• Utilities & Telephone Services Transfer: Buyer should contact Seller prior to closing to arrange all necessary utilities transfers including telephone services.

• Accounts Receivable, Accounts Payable, Work In Progress: If applicable, or if not already addressed in the purchase agreement, Buyer and Seller should have a clear understanding and ownership of these items.

• Allocation Of Purchase Price: Prior to closing , The Buyer and Seller should come to an agreement about the allocation of the purchase price of the target business. Consult your accountant or CPA if you have questions. Click here to print a blank allocation form

• Closing Statement & Documents: Buyer should request copy of closing statement from the escrow company or broker a few days prior to closing date to review, and to prepare a certified cashiers check for closing date made out to the Escrow company. Buyer may also request a copy of closing docs to review if desired.

• Post Closing Buyer Training & Familiarization: Prior to closing, The Buyer and Seller should discuss the pre-determined business familiarization period and training schedule, as well as an introduction to employees of business.

• Closing Day: Buyer and Seller to attend closing and sign business transfer documents. Buyer must bring picture ID, as well as a certified cashiers check for settlement funds due.

Other helpful small business resources when buying or starting a business in AZ:

• Small Business Services Online Program- guides you through what you need to know to start or expand your business in the state of Arizona