Every business contract will be unique, but there are similar requirements for each one. A contract is at the heart of every kind of formal business relationship. If a contract is missing one of the required elements, it will not withstand legal action. A contract must contain an offer. This would be the reason for creating the contract. One of the parties offers something to the other party or parties. The language used in forming the offer must be clear so that all parties understand what obligations are associated with the offer. A contract must also include an acceptance of the offer explaining what actions the other party will take in accepting it. If the offer is not accepted, the contract would not be legally binding.
A contract will also need to include “consideration.” This means the financial value or quantity of the goods/services being exchanged. Additionally, all parties need to be of clear mind and not be unlawfully pressured to agree to the contract. All parties are required to be competent and have the necessary legal capacity for signing the contract. Each required component must be included in a business contract in order to avoid possible future liabilities.
At times, it is necessary for a business to “go out of business,” or close. This may be due to the owner retiring, the company being acquired by another company, or a dispute between partners. The reasons for a business closing vary widely, and could also include:
Formally closing a company will not happen until its business dissolution is finalized through the state. Several months may go by while the dissolution is being completed. It is required that the company liquidate assets and cease operations. Monies from the liquidation can be used to pay creditors and bank loans.
Mapping out a company’s exit strategy beforehand is a prudent choice. Whether the plan is for the business owner to sell their company or to simply close it, creating a plan for the end of the business assists the owner in making decisions during the different phases of growth. When the end is kept in mind, this can help maximize the value of the business and protect the interests of lenders, investors, and owners.
If you are getting ready to purchase a business, there are certain things that you as a new owner should keep in mind. Firstly, understand exactly what it is that you are purchasing. An LLC or corporation could have tax debts or other liabilities attached to it. Conversely, there may be assets attached to the business. If a purchase/sale transaction covers assets only, the taxes of the new owner would be calculated accordingly and could result in a cost savings. A well-
It is important to find out if the seller is current on sales taxes, payroll taxes, and any other accounts. When you have a complete picture of the financial standing of the seller, you are in a better position for future success. There could also be items that the seller has prepaid and should be reimbursed by the buyer during the closing. This could be leasing costs or other prepaid expenses that may be prorated and added as closing adjustments. A buyer should expect and be prepared for such expenses. When an existing business is taken over, there are many other factors that should be considered. A knowledgeable business lawyer will help in negotiating purchase or sale terms.
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