The information in this section is intended for prospective Florida business Buyers. There are numerous laws and regulations required to legally own and operate a business in the State of Florida. Unfortunately, it would be impossible to prepare an exhaustive or comprehensive list of everything a business buyer will need to do to prepare to assume the ownership and operation of an existing business. Every business is different and has unique requirements. A buyer of an existing Florida business should consult their attorney and accountant and work closely with these professional advisors, along with the seller of the business, in order to research and properly prepare to assume legal ownership and operation of the business. We hope this brief introduction prompts you to do the necessary due diligence and research to become a successful owner of a legally owned and operated business.
Once a Buyer is committed to closing on the sale of a business, there is much to do. The list of tasks varies greatly depending the type, size and complexity of the business, the Buyer’s preferences and the legal requirements to own and operate the specific business being acquired. Although most Sellers are very helpful and obligated contractually to assist in the transfer of the business, practically speaking it is up to the Buyer to hire an accountant, seek legal advice from an attorney and take all of the appropriate steps to make sure they meet all of the legal requirements to own and operate the business at the time they assume ownership.
Some of the items on a checklist that may need completed prior to buying an existing business may include:
- Consult an Attorney to set up the appropriate legal structure to own the business and reduce personal liability. The most common legal structures for owning a Florida business are a Subchapter-S Corporation or Limited Liability Company (LLC).
- Select a business trade name and determine if you need to register the business name with a fictitious name filing. Owners conducting business under a name other than their own may need to file, even if the name seems very similar.
- Speak with an Accountant regarding the tax implications of the legal structure and the allocation of the businesses purchase price. The accountant can apply for an Employer ID Number (EIN)
- Open a commercial bank account for your operating and/or payroll account(s)
- Decide if you will do in-house payroll or use a payroll service or employee leasing service. Many of these services offer complete human resources departments and all of the payroll tax and unemployment tax required filings quarterly and annually
- Set up a credit card vendor/machine
- Apply for Department of Revenue Sales Tax License
- Determine which licenses the business presently has and make sure they are current and valid at the time of sale.
- Local business registration: Obtain City, County and/or Florida Occupational License applications and research the process of how and when licenses can be obtained and whether or not the licenses are transferable. Call city and county government offices to see if they require a local business tax certificate (formerly an occupational license) and/or zoning permit. For local business tax certificates, check with the city clerk or county tax collector. Fees vary by type of business and location. Many municipalities now make the forms available online.
- State business registration and licensing: Pay special attention to State Department of Business and Professional Regulation (DBPR) Licenses, State Qualifier Licenses, County Specialty Licenses, Liquor Licenses, etc. These licenses may have special requirements that have to be met in when a business changes ownership. Businesses found not operating with the proper licenses may receive “cease and desist” orders and be fined, reprimanded or lose the right to do the type of business the license allows.
- Check into business liability and content insurance. Start with the carrier being used by the Seller. Insurance is not transferable in an asset sale. Make sure you have a binder prior to closing. Research this well before closing. Insurance in Florida can be difficult to obtain in flood zones or coastal zones considered to be endangered by the threat of hurricanes. This also applies if you are buying real property.
- Work closely with the Seller to set up the transfer of all utilities, the phone, yellow pages, other advertising; etc.
- Find out what contractual and/or business obligations and relationships the company has with customers, outside suppliers, vendors or services. This could be anything from leased equipment, floor planning or other product financing, redeemable gift cards, coupons or vouchers, vendor or supplier credit applications for key vendors of the business, distribution agreements, territory agreements, vendor purchasing requirements or agreements, customer contracts or service agreements, product or service warranty obligations, industry or local business group memberships, etc.
- Florida Tangible Personal Property Tax. Florida businesses that own tangible personal property (equipment, furniture, computers, etc.) that is not included in the assessed value of the real property must pay an annual tax. The tax is paid on form DR-405 to the county property appraiser. The estimated tax for the current year should be pro-rated at closing, with the Seller covering their pro-rata share up to the date of closing.
- The list can go on and on depending on the nature of the business you are buying.