Following are several advantages and disadvantages of stock sales for buyers:

 

Advantages

 

1. The business has established credit;
2. Subject to the approval of the premises landlord, the lease is in place;
3. Vendor contracts are in place;
4. Employees are in place;
5. Required licenses are in place; and
6. No sales tax must be paid on furniture, fixtures, and equipment

 

 

 

Disadvantages

 

1. The buyer assumes corporate liabilities which may be unknown or undisclosed,
2. The buyer assumes liability for any employee claims, and
3. Most CPAs and attorneys do not recommend stock purchase to their clients who are buyers.

 

 

Bill of Sale

A bill of sale is a written, legally binding document that records the transfer of ownership of personal property from the seller to the buyer. The property may be equipment, machinery, inventory or other valuable property. A bill of sale protects both the buyer and seller. It should include a description of the property being transferred, the price, the parties, and any terms including warranties or guarantees.

 

This is not intended to be legal advice. For legal advice, consult with an attorney with business sales experience. Please see: Advantages and Disadvantages of Asset Sales for Buyers.