Post-Sale details to complete before you can truly walk away
After you have completed your business sale, and your business and its name are now owned by your buyer, it's time to make an official announcement and move into your new role - whether that means an entirely new chapter in your life or just a new relationship with your business and its new owner.
First, though, there will be a list of post-sale paperwork and actions to undertake in order to transition business operations to the buyer. Your attorney and your broker can help guide you through this final post-closing activity.
STEP 1 - Immediately after closing, provide the buyer with all information necessary to assume operation of your business.
What used to be your business now belongs to the buyer so you will need to turn over all information that allows the buyer, now the owner, to assume its operations, including:
- Alarm codes
- Computer, software and online access codes and passwords
- Safe combinations
- Customer, supplier, vendor, and distributor lists and supporting information
- Keys to locks including building doors, vehicles, files and cabinets
- Operating manuals for all equipment
- Your personal contact information (especially if you are not remaining during a transition period) with where to send all material required by the purchase and sale agreement
STEP 2 - Take legal steps to dissolve your business entity.
The vast majority of small business sales take the form of asset sales in which the buyer acquires all but specifically excluded assets of the business, including its name.
If your business was formed as a sole proprietorship, following the sale it will close automatically once you wind up business operations by following the actions listed in Step 3.
But if your business was structured as a corporation or LLC, you have to dissolve your business entity:
- Meet with your board, partners, or members to pass a resolution to formally dissolve the business.
- Notify the IRS within 30 days of dissolution using the appropriate forms.
- File articles of dissolution with the state where your business was formed along with any other state where it is registered.
Step 3 - Complete forms and actions to cease operations of your business entity.
Now that the business belongs to a new owner, if you should remain during a transition period, be helpful to staff, customers and business associates so they will maintain their confidence in the new buyer and transfer their loyalty to the new business.
- Notify contacts for all contracts that are being assigned to or assumed by the buyer.
- Notify creditors to explain how bills will be paid, either by you or the buyer.
- Cancel business permits or licenses, assumed business names, and other registrations.
- Give cancellation notice on your lease if it isn't transferring to the buyer.
- Cancel insurance policies not being assumed by the buyer.
- Payoff bills and collect accounts receivables not being assumed by the buyer.
- Distribute assets remaining in your business after the sale closing, either to yourself, if sole proprietor, or to shareholders,partners or members if a corporation or LLC.
- Close your employer ID number with the IRS.
- Close business bank accounts and credit cards.
- Close business line of credit, if any.
- Pay final wages to employees, and payroll taxes and fees due to tax authorities.
- File necessary tax forms using the IRS "Closing a Business Checklist".
Make sure to remove yourself of the visible leadership role unless your agreed-upon role specifies otherwise.
Congratulations! You've done it. You've sold your business and it's time to set a new goal for your future, chase a new dream, buy a new business, enjoy your retirement. Whatever it may be, the sky's the limit and you may now move forward and onward.