Frequently Asked Questions
Q.
Will The EzBizDocs Forms work for my particular transaction?
The EzBizDocs Closing Forms are designed to confirm most transactions for the sale and purchase of a business and business assets from a SELLER'S corporation to a BUYER'S Corporation.
Q.
Will the EzBizDocs Forms work for the sale and purchase of stock of a corporation, rather than the assets?
No, the EzBizDocs Forms are designed specifically to confirm an asset sale and purchase, not a sale or transfer of stock. Checklist.
Q.
What's the difference between a business asset sale and stock sale?
A business asset sale and purchase is a transaction in which a SELLER'S corporation sells its tangible assets (things you can touch like the furniture, fixtures, equipment) and the intangible assets (things you can't touch, like the tradename and goodwill of the business) to a BUYER'S corporation. A stock sale and purchase is a transaction in which the SELLER sells the shares of stock of a corporation to a BUYER who takes over the business operations of the corporation.
Q.
What happens to the name of the business when I buy the corporate assets?
The name of the business which is known to the public, if different from the name of the SELLER'S corporation, is known as the "fictitious" or "trade" name and is considered an "intangible asset" and is included in the goodwill of the business. The EzBizDocs Forms include a provision whereby the SELLER sells to the BUYER the right to use the fictitious name and a Fictitious Name Transfer Form. In most cases it is a good idea for the BUYER to register the fictitious name to the BUYER'S corporation, to protect against third parties' unauthorized use of the name.
Q.
What is the "goodwill" of the business?
"Goodwill" is a category of valuable intangible assets of the business, which include the "fictitious" or "trade name" of the business, the public recognition of the trade name, the reputation of the business and the established relationship with the customers of the business.
Q.
Do the EzBizDocs Closing Forms cover employment issues?
No, the EzBizDocs Closing Forms cover the issues relating to the sale and purchase of business assets, primarily between a corporate SELLER and a corporate BUYER. The BUYER'S corporation will need to confirm its agreement with its employees on an individualized basis. You should consult with an attorney in your area for advice in this regard.
Q.
Can I use the Seller's business licenses?
It depends on the type of license and the laws in your particular state. Some licenses may or may not be transferable or assignable from the SELLER. Generally, before the closing of the transaction, during due diligence investigation, a BUYER should review all of the SELLER'S business licenses and contact the local agency that administers the particular license to confirm transfer requirements.
Q.
If I buy the Seller's business, am I responsible for the Seller's debts and prior business expenses?
No, in an asset sale and purchase transaction, the BUYER is only buying the assets of the SELLER'S business and is not taking responsibility for the the SELLER'S debts. Generally, unless the SELLER and BUYER agree, the SELLER should sell and transfer the assets of the business to the BUYER free and clear of all debts, liens and encumbrances (use the EzBizDocs SELLER'S Non-Lien Affidavit). The BUYER should require proof of payment of all of the SELLER'S operating expenses and liabilities, which accrued prior to date of the closing, or the SELLER should be required to pay those expenses and liabilities at the closing from the SELLER'S proceeds.
Q.
What is a proration?
A proration is a method of dividing liability for expenses that were prepaid by the SELLER before the closing or expenses that the BUYER will pay on the SELLER'S behalf after the closing. For example, if the SELLER paid rent in the amount of $1000 for a given month and the closing occurs in the middle of the month, the BUYER will need to prorate the rent paid by the SELLER by paying back to the SELLER $500, an amount equal to the rent for the balance of the month.
Q.
What is "due diligence"?
The term "due diligence" broadly refers to a BUYER'S investigation of the SELLER'S business, including the equipment, inventory, workforce, lease and customers and confirmation of the SELLER'S past business activity and records. "Financial due diligence" refers specifically to the BUYER'S review (usually with a Certified Public Accountant) of the SELLER'S books, records and tax returns to determine and confirm the costs associated with the operation of the business and the past profitability of the business.
Q.
What is a promissory note?
A promissory note is a document that evidences a monetary debt, owed from a borrower (also called the "Maker" of the note) to a lender (also called the "Holder" of the note). A note is usually structured whereby the debt is paid back from the "Maker" to the "Holder" in monthly installments of principle and interest until the debt is paid in full.
Q.
What's the difference between an "asset sale" and a "stock sale"?
The EzBizDocs Closing Forms are designed to structure and confirm an asset sale of a business from a SELLER to a BUYER. In a typical business asset sale transaction, the SELLER is selling to the BUYER the tangible assets (equipment, furniture, fixtures) and intangible assets (the goodwill) of the business, and a stock sale is a transaction involving the sale of the shares of stock of a corporation, rather than the business assets.
Q.
What does the Bill of Sale do?
The Bill of Sale is a document which confirms that the SELLER has sold and transferred ownership of certain assets (as described and listed on Exhibit "A" in the document) to the BUYER. The EzBizDocs Form Bill of Sale contains broad language to include all "tangible assets" of the SELLER'S business located at the business address and can be further detailed to include specifically listed assets.
Q.
What is the No-lein or Seller's Affidavit?
A no-lien affidavit is a document signed by the SELLER, wherein the SELLER states under oath that all of the assets sold to the BUYER in the transaction are free and clear from all liens and encumbrances. It is recommended that a BUYER research the local and state records where the business is located to determine whether there any liens of record.
Q.
What should I do if my corporation is dissolved?
You may have to reinstate your corporation. This is usually accomplished by paying a registration fee to the State where your corporation is located. However, a dissolved corporation may enter into a transaction to sell its assets as part of winding down its business affairs.
Q.
What is a Security Agreement?
A Security Agreement is a mortgage instrument which confirms the collateral security of a debt; a mortgage over tangible assets.
Q.
What is an asset?
Generally, an asset is something of value. Businesses have tangible assets like cash, furniture, fixtures, equipment, and inventory and intangible assets like goodwill, the customer base, name recognition, a positive reputation with customers and location.
Q.
What is a tangible asset?
A tangible asset is an item of value that you can touch, for example, the furniture, fixtures, equipment, inventory, land, buildings and physical items of value.
Q.
What is a intangible asset?
An intangible asset is a non-physical item of value; for example, the goodwill of a business, the trade name or brand of a business and positive reputation with customers.
Q.
What is goodwill?
An amount or value of an intangible asset; the amount paid for a company or business in excess of the value of its tangible assets.
Q.
What does incorporation mean?
Incorporation is the legal process to form a corporation; the legal process that make a business a separate entity from its owner.
Q.
What is a lease?
A lease is an agreement (verbal or written) for the rental or use of another's property.
Q.
What is an account receivable?
An account receivable (or receivable) are goods or services which have been sold or rendered and billed or invoiced, but have not been paid.
Q.
What is a personal guaranty?
A personal guarantee is a promise by an individual to take personal responsibility for the repayment of a loan or debt obligation of a corporation.
Q.
What is a corporation?
A corporation is the most common form of business organization; chartered by a state and given many legal rights as an entity separate from it owners.
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Asset Sale & Purchase Complete Package
The EzBizDocs Complete package for Asset Sale & Purchase. This is a comprehensive set of documents needed to confirm an Asset Sale & Purchase transaction (without seller financing).

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The EzBizDocs, Inc. Forms provide a general format and content and the validity requirements vary depending on state and local requirements. The EzBizDocs, Inc. Forms require modification to include the specific terms of your transaction and to comply with your state's laws and local regulations. It is recommended that you have a licensed attorney in your state review any EzBizDocs, Inc. Forms that you may use to ensure that the completed forms address and confirm the specific terms of your transaction and comply with your state and local laws.