There is nothing more important than the aspect of due diligence when it comes to buying a business. This investment is the largest financial decision that most people will ever make. With this in mind, you will want to leave no stone unturned. Here are the three most commonly overlooked areas when it comes to buying a business.
Examine All Legal Documents
It is a “pain” to investigate all legal documents relating to a business that you are purchasing. Yet, that is exactly what you have to do. All areas of intellectual property should be carefully examined. From copyrights and trademarks to other areas. Make sure that you receive copies of everything from documentation of intellectual property to consulting agreements.
When you are buying a business, don’t forget about retirement plans. This mistake can transform into disaster. Before taking ownership, make sure the retirement plans are 100% up to date with the Department of Labor and ready to go.
W-2’s and 1099’s
Make certain that if 1099 forms were given out instead of W-2’s, that it was done within IRS rules. You do not want problems with the IRS. Failure to perform due diligence can result in just that. Do your homework!
It is extremely important to stay focused when buying a business. Make sure to perform your due diligence. You want to protect yourself from any unwanted surprises. One way to protect yourself, is to work with EBIT Associates. We know what to look for when buying a business and what kinds of documents to examine. We can help you through the process of buying a business.