Now that you have reached an agreement for price & terms… What next?
There are several steps that a buyer should do after they have reached an agreement with the seller. This page is created to provide you with many of the critical steps required and resources that are available to assist you in the buying process. Please feel free to contact any of our Intermediaries if you have questions.
There are many forms of legal structure you may choose for your business. The most common structures are Sole Proprietorships, General & Limited Partnerships, C and S Corporations and Limited Liability Companies. Each legal structure offers organizational options which are appropriate for different personal situations and which affect tax and liability issues. We suggest you research each legal structure thoroughly and consult a tax accountant and/or attorney prior to making your decision.
Fictitious Business Name
Registering your business name, after doing a search to make sure that it is not already in use, protects you from others who might be using the same name. You will need to register for the Fictitious Business Name aka dba (Doing Business As) prior to opening up your bank account for the business. The Fictitious Business Name must be published in local newspaper for 4 weeks. See instructions from the county clerk.For more information contact the County Recorder in the county in which your business is based. You must file a Fictitious Name Statement with the:
County Clerk & Recorder
800 S. Victoria Avenue
Ventura, CA 93009
Los Angeles County
Office of County Clerk-Registrar-Recorder
12400 Imperial Highway
Norwalk, CA 90650
After filing the Fictitious Business name (or dba) a business account can be opened. Most banks require proof of the dba and your drivers license and social security number to open an account. Check with your bank of interest for any additional requirements.
There are many types of licenses, both state and local as well as professional. Depending on what you do and where you plan to operate, your business will be required to have various state and/or municipal licenses, certificates or permits. Licenses are administered by a variety of departments. First check with the license office n the city or town where you plan to do business. Incorporated cities are responsible for issuing business licenses. Contact:
800 S. Victoria Avenue
Ventura, CA 93009
Los Angeles City Hall
201 N. Main Street, Room 101
Los Angeles, CA 90012
Santa Barbara County
105 E. Anapamu Street
Santa Barbara, CA 93101
Sales Tax and Sellers Resale Number
State Board of Equalization
Employer Identification Number
Taxpayers can call a toll-free number, (866) 816-2065, to get an Employer Identification Number (EIN). IRS customer service representatives are available to answer calls Monday through Friday, from 7:30 a.m. to 5:30 p.m. customer’s local time. Taxpayers can fax EIN requests 7 days a week/24 hours a day by dialing the fax number to one of three IRS Campus’ that accept applications. The instructions on the newly revised Form SS-4, Applicatioin for Employer ID Number, indicate which IRS Campus is assigned to their specific state. Detailed information and an electronic SS-4 can be found at the IRS Small Business/Self Employed Community Web site at: www.irs.gov/smallbiz, click on New Businesses. Faxed applications are processed in four days. The IRS Campus’ accepting faxed applications are:
Holtsville, NY (631) 447-8960
Cincinnati, OH (859) 669-5760
Philadelphia, PA (215) 516-3990
IRS accepts third party Form SS-4’s. Tax practitioners complete the new “Third Party Designee” section on their own client’s behalf by obtaining the client’s signature that practitioners file a Form 2828, Power of Attorney or Form 8821, Tax Information Authorization to get an EIN for their clients.
Federal Self-Employment Tax
Everyone must pay Social Security and Medicare coverage. If you are self-employed, your contributions are made through the self-employment tax. The IRS may seem like a complicated maze, but there are publications, counselors and workshops available to help you sort it out. For more information contact the IRS at (800) 829-1040.
Sales Tax Exemption Certificate
If you plan to sell products, you will need a Sales Tax Exemption Certificate. It allows you to purchase inventory, or materials, which will become part of the product you sell, from suppliers without paying taxes. It requires you to charge sales tax to your customers, which you are responsible for remitting to the state. You will have to pay penalties if it is found that you should have been taxing your products and now owe back taxes to the state.
Like home insurance, business insurance protects the contents of your business against fire, theft and other losses. It is prudent for any business to purchase a number of basic types of insurance. Some types of coverage are required by law, others simply make good business sense. For more information contact your insurance agent or broker.
As an employer, you are responsible for paying payroll taxes, withholding employee taxes and reporting employee wages and new hires. (Officers of corporations are employees, but sole proprietors or partners are not.) You must make tax and withholding payments and file quarterly payroll reports. For information, assistance, seminars available and forms, contact:
Employment Development Department (EDD)
State Income Tax:
California Franchise Tax Board
Federal Income Tax:
Internal Revenue Service (IRS)
Workers’ Compensation Insurance:
State Compensation Insurance Fund
If you hire employees you may be required to provide unemployment or workers’ compensation insurance.
An accountant can assist a small business in establishing a sound bookkeeping system, preparing periodic financial statements, preparing state and federal income tax returns, preparing social security withholding, property and other tax returns, budgeting and forecasting, and consulting on various financial aspects of the business. KeyStone will be glad to provide a list of accountants that have experience in the business transition process.
Many business owners consider legal services only when their firms are in trouble. However, costly and time-consuming legal problems can be averted by retaining a competent attorney who can advise on such business issues such as: choosing the type of business organization that best suits your business; advising you as to local, state and federal regulations that affect your business; obtaining licenses and permits; preparing or inspecting contracts; assisting in obtaining financing; and providing advice on many business problems. KeyStone will be glad to provide a list of lawyers that have experience in business law.