A business bill of sale, also known as a “purchase agreement” is an official form that transfers an individual’s ownership of a company (or their shares) to a buyer in exchange for payment. The document is withheld by the buyer, allowing them to prove that they are now the rightful owner. It can be used with any business structure, including partnerships, sole proprietorships, LLCs, corporations, and non-profits.
A business bill of sale catalogues that a person gave their ownership in a business to another party. Depending on the structure of the company, this can include the transfer of shares, stocks, or the company as a whole. This also includes the assets of the company, which can make up a significant portion of the business’ value.
Potentially. If you have limited experience in negotiating business dealings, aren’t sure how to value your company, and/or don’t know where to begin finding a buyer, hiring a broker can reduce a lot of the stress that comes with selling a business.
Typically, yes. When one sells their business, the money they have in their accounts is almost always kept. If the business sells for $10M, and you have $1M saved, you keep $11M. However, if you have $750k in liabilities, these will need to be paid off, meaning you would retain the remaining $250k.
Most likely yes. While negotiable, the purchasing entity commonly requires the seller to sign a non-compete that restricts them from directly competing with their customers. For physical businesses, the seller will be prohibited from operating a business within a specific number of miles of the establishment (such as 800 miles).
The bill of sale is used at the end of the selling process, after the parties have sorted out the financials and how they plan on transitioning. For businesses that require a significant amount of inside knowledge to manage, the buying party will often require that the seller remain in an advisory role to mentor and guide them for the first few months (up to a year) after the purchase.
Completing the bill of sale is one of the easiest steps, as the form is short and can be filled-in and signed in a matter of minutes. To complete the form, the parties must do the following:
1. Write the Names of the Buyer and Seller
At the top of the document, write the date in which both parties will be signing the form. Then, in the proceeding eight (8) fields, write the full names and addresses of both the buyer and seller.
2. Specify the Business Details
Write the official name of the company, followed by the state in which it was incorporated and its principal address.
3. List the Purchase Price
Enter the total monetary amount ($) the buyer will be paying for the business entity. Then, write the day, month, and year in which the money will exchange hands.
4. Sign the Form
Both the buyer and seller need to sign and print their names onto the document. Although not mandatory, the parties should have their signatures witnessed (who also have to print and sign their names) OR notarized. This proves the signatures of both parties are real, and that they both understood what they were signing.