Don’t Let the Seller’s Liens and Taxes Stalk You

stalking liabilities

“Leave the gun. Take the cannoli.” Fictional mobster Peter Clemenza delivers this famous line in The Godfather after a drive into the country with the godfather’s driver Pauli. The driver betrayed his boss and Clemenza has just meted out justice.

Take the good stuff. Leave the bad stuff. That’s the main idea behind buying a business via an asset purchase. Here are a few pointers so you won’t find yourself pursued by the Seller’s unpaid taxes and liens.

What’s an asset purchase?

There are innumerable ways to structure the purchase of a business, but most deals are either asset purchases or equity purchases. In an equity purchase, the buyer purchases the equity of a company (often referred to as the “target”) from its equity holders — stock in the case of a corporation and membership interests in the case of a limited liability company. The buyer ends up with the entire company, along with all of its assets and all of its liabilities. In a deal structured as an asset purchase, on the other hand, the buyer purchases the company’s assets but leaves the corporate entity behind, along with some or all of the company’s liabilities.

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Buying a Sole Proprietorship

buying a sole proprietorship

Sole proprietorships pose unique issues when they are bought or sold. Sole proprietorships are businesses that are owned by a single individual rather than by an entity such as a corporation or limited liability company.

Most businesses are held and operated by companies rather than by an individual. Entities such as corporations and limited liability companies are created under state law by filing a document with the secretary of state and are treated under state law as a legal person separate from their owner(s). When the business is sold, the buyer’s focus is mostly on the entity: because the business assets and liabilities are contained within the entity, the buyer’s due diligence is focused on the entity’s assets, liabilities, and contractual relationships.

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Recording a Lien on a Missouri Vehicle

Missouri vehicle lien

In How to Title a Vehicle in Missouri, I provide step-by-step instructions on how to transfer title to a vehicle, obtain a new title, and register the vehicle. In today’s post, I discuss recording a lien on a vehicle.

When you purchase a business via an asset sale, you have to transfer the assets you’re purchasing out of the seller’s company and into your company. Most assets can be transferred by having the seller sign a general bill of sale. But some assets, such as cars and trucks used in the business, have special rules.

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How to Title a Vehicle in Missouri

title_registration_form

When you purchase a business via an asset sale, you must transfer the assets from the seller’s company to your new company. Many of the business’s assets can be transferred using a general bill of sale. Other assets, such as automobiles, must be transferred separately.

In Missouri, vehicles must be titled within 30 days after the date of purchase. There’s a penalty of $25 for every 30 days — up to a maximum penalty of $200 — for failure to title a vehicle on time.

To title a vehicle in Missouri, you must submit the following documents at your local license office: Continue Reading