Services
Buying a Small Business in Illinois
When you buy a small business you take on its contracts, its lease, its people and its brand, and in Illinois you can take on the seller's unpaid state tax if you miss one notice. Attorney Ryenne Shaw helps buyers get the legal pieces right before they sign.
What you don’t know can hurt you, and that’s never truer than the day you buy someone else’s business. The buyer typically takes over full ownership, and with it a customer base, operating expenses and employees. You also inherit whatever is sitting underneath all of that. So let’s look before you sign.
The Bosses’ Lawyer works with small business owners and entrepreneurs in Illinois on the same things a purchase runs on: contracts, commercial leases, entity selection and formation, trademarks and employees.
What should you check before you buy?
The SBA tells buyers to review the full landscape and not be afraid to ask questions about contracts, leases, existing cash flow and inventory, then to look into licenses and permits, zoning, environmental concerns if real property is part of the deal, and the value of the business. Our guide to what to check on a business you’re buying walks through each one.
Your accountant owns the numbers. An accountant can help you determine the full costs of purchasing and operating the business. My side is whether the paper protects you.
What are the Illinois steps?
Illinois has one step every buyer should know by name. A bulk sale is when a business, outside the normal course of business, sells the major part of its stock of goods, or of its furniture or fixtures, machinery and equipment, or real property subject to certain Illinois tax acts. When that happens, the purchaser must file Form CBS-1, the bulk sale notice, with the Illinois Department of Revenue at least 10 business days before the sale.
Miss it, and you can be personally liable for what the seller owes the Department, up to the reasonable value of the property you acquired. That is exactly the kind of thing that turns a good deal into an expensive job.
What happens to the brand, the price and the tax numbers?
Three questions tend to come up at the same table:
- Does the brand come with it? If you’re buying a registered trademark, the assignment should be recorded at the USPTO. Read does the brand come with the business.
- How is the price divided? When a group of assets makes up a trade or business, both buyer and seller generally report the allocation on IRS Form 8594.
- Do you need a new EIN? The IRS answer depends on the entity type. See do you need a new EIN after buying a business.
And if you’re financing the purchase, the lender’s checklist becomes part of your timeline. Start with using an SBA 7(a) loan to buy a business.
How do we start?
You book a discovery call. I do a personalized assessment of where you are in the deal and clarify how I can help. If we decide I’m a good fit, I prepare a plan of action and we begin. See my other business services or book a discovery call at 866-217-3432.
- The deal documents
The SBA's list is a good start: letter of intent, confidentiality agreement, contracts and leases, sales agreement and purchase price adjustment.
- The entity you buy through
Start with the right legal structure, so the business you're buying is held the way you actually want to own it.
- The commercial lease
You only have the rights the lease gives you. Before you step into a location, you need to know what those rights are and what can still be negotiated.
- The brand
If the name, logo or slogan is part of what you're paying for, ownership has to actually move to you, and the USPTO has a process for recording that.
- The employees
Offer letters, employment agreements, non-disclosure agreements and policies for the team you're taking on.
- The Illinois bulk sale notice
Form CBS-1 goes to the Illinois Department of Revenue at least 10 business days before the sale when the transaction is a bulk sale.
FAQ
Buying a Small Business in Illinois Questions
Still have questions? Book a discovery call.
Do I need an attorney to buy a small business?
The SBA's guide to buying an existing business says that at this stage you'll probably want professional help, and to consider hiring an attorney and an accountant. Together they can help you create and evaluate documents like the letter of intent, confidentiality agreement, contracts and leases, financial statements, tax returns and sales agreement.
Can I end up owing the seller's Illinois taxes?
You can. In a bulk sale, if Form CBS-1 is not filed in a timely manner, the Illinois Department of Revenue says the purchaser is personally liable for what the seller owes the Department, up to the reasonable value of the property acquired. The form is due at least 10 business days before the sale.
Can I use an SBA loan to buy a business?
The SBA lists changes of ownership, complete or partial, as a permitted use of a 7(a) loan, and the maximum loan amount is $5 million. You apply through a lender, and your lender decides what documents it needs. Read more in our guide to using an SBA 7(a) loan to buy a business.
Do you work on purchases outside Illinois?
I'm licensed in Illinois, so this page is about buying a business in Illinois. If your deal is somewhere else, call me and I'll tell you straight up whether I can help.
Get In Touch
Ready to Get Started?
When you buy a small business you take on its contracts, its lease, its people and its brand, and in Illinois you can take on the seller's unpaid state tax if you miss one notice. Attorney Ryenne Shaw helps buyers get the legal pieces right before they sign.