Buying a business is considerably different from other acquisitions since it might have major financial, tax, legal liability, and other repercussions. It is crucial to employ a procedure that reduces your danger once the transaction is complete for this reason (the closing). This article makes the assumption that you've found a company you'd want to buy but are unclear of the appropriate course of action to take.
Step 1: Calculating the Price
Sometimes figuring out the offer price for a firm may be very simple, especially if you are already highly familiar with the company, have extensive understanding of the sector, or are familiar with previous sales of businesses that are comparable to the target company. Clearly, whether or not you end up with a decent deal depends on the buying price. You should hire an appraiser, accountant, investment banker, or other valuation specialist to help you if you've already identified an acquisition target but are unsure of the package of compensation to offer in exchange (commonly referred to as consideration). You will be in a better position to decide what cash sum or other payment, whether at a discount, market pricing, or a surplus, you would want to offer the seller after determining the target company's value. Be aware that the compensation you provide the seller may be a mix of cash, debt, stock, assets, and other types of payment. The recommended remuneration will ultimately be determined by your liquidity, negotiating position, and risk tolerance.
Step 2: Select an Agreement Structure
Although there are many inventive methods to acquire a company, the three most popular fundamental forms are merger, stock acquisition, and asset purchase. Each of these options has a different level of intricacy as well as various tax and responsibility repercussions. See Acquisition Agreements for additional discussion on this subject (for Sale of Business). To find out which structure will best meet your tax and liability needs, speak with your accountant, legal counsel, or tax advisor.
Step 3: Sign the Letter of Intent.
The parties should sign a "letter of intent" once you've decided on the acquisition's purchase price and transaction structure (LOI). The letter of intent is (usually) a brief, non-binding letter of agreement that contains the essential terms of the transaction and is signed by both parties.
The LOI should outline the acquisition price, the transaction structure, the required due diligence (described below), the parties' expectations for the purchase agreement, the anticipated closing date, and any other significant information that has been reached by agreement between the parties. The LOI is non-binding in that neither party will have the right to bring legal action against the other if the actual transaction structure differs somewhat from what is described in the LOI or if the deal doesn't complete at all. It is meant to act as a good faith road map that will allow both parties to go forward with confidence that they are on the same page.
Step 4: Make a final check list.
A closing checklist, which is a list of every single document, instrument, or activity that has to be finished, signed, or delivered in connection with the closure, should be created as soon as feasible after the LOI is signed. Throughout the process, this list should be updated often and shared with the seller to provide full transparency on expectations and unfinished business. crucial record that will help the deal go as smoothly as possible. When parties believe they are ready to close but discover that one or more important conditions have not been met, it can be very frustrating. The final checklist is therefore the most important.
Step 5: Exercise due diligence
Consider an inquiry when the phrase "due diligence" is mentioned. Due diligence is the investigation of every aspect of the target business that can expose you to responsibility when you become the new owner. Examples of frequent areas of vulnerability include tax, environmental, legal, regulatory, and contractual responsibilities. Since you will eventually be held liable for these responsibilities as the buyer, this is very important from your point of view. Ironclad clauses that either restrict or completely remove the buyer's liability to such liabilities should be included in the acquisition agreement. For instance, the buyer might accept a lower purchase price in exchange for the seller removing certain obligations as a condition of closing, provide the buyer with coverage for certain post-closing liabilities, or both. Keep in mind that there's always a chance your due diligence inquiry can turn up one or more liabilities that you feel to be very worrisome, leading you to decide to back out of the acquisition entirely. While this could first appear to be a bad outcome, you should also understand that effective due diligence can save you from making a transaction that would otherwise cause you a great deal of future pain or loss.
Step 6: Talk about the Purchase Agreement.
Since the buyer is the one putting up the cash and is at the greatest risk of loss, the buyer is often in charge of negotiating the purchase agreement. Ideally, you should have a contract lawyer who specializes in mergers and acquisitions create this document for you.
Step 7: Obtain all approvals and consents
All consents and permissions necessary to effectively complete the deal should be on the closing checklist. The checklist should, for instance, contain any approvals needed from the landlords, customers, suppliers, stockholders, board of directors, creditors, or any third parties of the buyer and seller. When carried out carefully and correctly, your due diligence procedure will examine any contracts to which the seller is a party, including any clauses that would require the counterparty's approval for your transaction. The failure to get any permission prior to closure might conceivably result in the contract being terminated, a fee being paid, the transaction being void, or some other unfavorable outcome.
Step 8: Put the Closing into Action
Corporate lawyers view the close as the point at which money is transferred and ownership is transferred. Alternatively put, it's payday. You should be prepared, willing, and able to deliver the purchase price on this day, and the seller should be prepared to deliver any necessary stock certificates, documents, or instruments to legally effectuate the transfer of ownership. All items on the closing checklist should have been completed. As long as all paperwork is fully signed and exchanged, the closing can take place either in person or virtually.
Keep in mind that every document you sign should state that it can be signed in counterparts, simply in case the parties aren't there to sign the identical documents together. After all of this is finished, the parties may either shake hands, hold a conference call, or exchange emails to say, "we are closed," and then they can rejoice over the acquisition's successful conclusion.

​If you have any questions about this article or similar matters, please contact our office, the Law Office of Yoel Molina, P.A., at fd@molawoffice.com or 305-548-5020.

It's impossible to provide detailed guidance on the specific kind of business you should launch because there are so many different kinds of businesses—and so many different kinds of people. The only person who can provide an answer to that question is you, however in order to increase your chances of success, you should:
 
Pick a hobby you enjoy.
Running an auto parts store when your true passion is art is an example of a small business that is harder (and far less enjoyable) to grow.
  Select a business with which you are familiar.
A new business will experience a lot of additional stress if you try to acquire a new industry or talent at the same time you start it up, which will reduce your chances of success. Yes, owning a bakery can be nice, but if you've spent the last ten years repairing vehicles and have no prior experience on bread making, you may be better off setting up your own shop. That's not to say you can't learn a new industry, but before you spend grandma's retirement funds on a wood-fired bread oven, you should learn how to run a bakery.
Pick a venture that stands a decent probability of making money.
You must conduct a "break-even analysis" to ascertain the potential profitability of your company.
  
What advantages do I have if I establish my own business?

A new business might be intimidating. But starting a prosperous small business may be both financially and emotionally satisfying. Here are some potential benefits of stepping out on your own, but only you can determine if you're prepared to quit your job and dive into running your own business:
Independent and adaptable. Working for yourself will provide you greater freedom and independence. You'll likely have the freedom to make sure you don't miss the moments and activities that are most important to you if your business is well-established.
Personal contentment Working for someone else can be less enjoyable and meaningful than owning and operating your own business. Many prosperous small business owners discover that they value the admiration their contemporaries show them for having the guts to strike out on their own.
making a distinction. You can improve the lives of your employees and the community when you create a successful business.
Money. Depending on your situation and the possibility for profit in your firm, you may be able to earn more money owning a business than you can working for someone else. And only you can decide if you're willing to forgo a reliable income in exchange for the advantages of being your own boss.

What are the dangers of launching my own business?

Although starting your own business has numerous advantages, there are also some hazards. The most typical ones are: 
Making a loss. To start a small business, you will need money. It's possible that your business won't flourish and that you, your friends, or the bank won't ever see that money again whether you empty your savings account, ask around, or borrow from a bank. If you have a dangerous business concept, consider whether you are prepared to jeopardize your retirement, your relationships, or even your good credit. 
Individual sacrifice. Success in business can cost a lot on a personal level. Most of your time, energy, and precious evenings and weekends may be spent starting up your business. You might not have a lot of time for your family or friends or the extra money to take your spouse on a second honeymoon. Consider whether you (and your family) are prepared to undertake some of the sacrifices needed for you to build a successful small business before quitting your employment.
Inherent dangers in business. Businesses that handle hazardous materials, produce culinary goods, look after children, sell alcohol, or engage in construction pose particular dangers. By creating a corporation or limited liability firm and investing in sufficient liability insurance, you can reduce these risks.

 How can I tell if my business will make money?

An excellent business plan might not even be financially feasible. You should create a business plan and a break-even analysis to determine how successful your idea will be.
Establishing a Break-Even Analysis
To evaluate if, at least theoretically, your business will generate enough sales revenue to cover its costs, you must estimate your income and expenses for a year.
A projection for break-even includes the following: 
How much money your business will make over a certain length of time (your projected sales revenue)
Your recurring expenses, including rent and insurance
Your profit (gross profit) after deducting the direct costs of the goods or services you supply, as well as the sales revenue required to sustain your business (your "break-even point" or "break-even revenue").
Your business has a high probability of succeeding if you discover that your break-even revenue is more work than it can handle—that is, if you can easily generate more sales than you'll require to cover your costs.
 A Business Plan's Writing
You must consider every element of the business before writing a business plan. You should cover the following in your plan:
The size of the market for your good or service, the names of its rivals, and the share of the market you hope to take.
Marketing techniques.
Monetary gain and cash flow.
Financing requirements and sources, including your personal money, credit cards, loans, and outside investments.
Staffing (hiring employees or independent contractors) (hiring employees or independent contractors).
Arranging for a backup plan in case things don't go as planned.
 
Your business plan might be concise and in outline form as you assess your business idea. You should add more details to the strategy if you decide to move through with the business, especially if you need outside finance (from a bank or others)

​If you have any questions about this article or similar matters, please contact our office, the Law Office of Yoel Molina, P.A., at fd@molawoffice.com or 305-548-5020.

Discover the advantages and disadvantages of company taxation.
Recognizing Corporate Taxes
The corporation itself is taxed on all profits that it is unable to deduct as business expenditures because it is a separate legal entity from its owners. Taxable profits often include both gains that are given to the owners (shareholders) as dividends and profits that are maintained in the business to fund costs or expansion.
Tax-Deferred Expenses
Many business expenses that a corporation incurs in the lawful pursuit of profit might be written off in order to lower taxable profits. A firm may write off its salary and bonuses paid to employees as well as all expenses related to medical and retirement plans for those employees in addition to start-up costs, operational costs, product and advertising expenditures.
Corporate Taxes Paid
Any gains must be taxed at a corporate income tax rate and reported on the corporation's IRS Form 1120. If a corporation will be subject to taxation, it must calculate the annual tax payable and submit quarterly payments to the IRS by the 15th day of the fourth, sixth, ninth, and twelfth months of the tax year. The payments are due on April 15, June 15, September 15, and December 15 if a firm uses the calendar year as its tax year.
Payments of Shareholder Taxes
If the corporation's owners are employed by the company, they must pay individual income taxes on their wages and benefits just like any other company's regular workers. The corporation does not pay taxes on salaries and bonuses because they are considered business expenses that can be deducted.
Dividend taxes
Dividend payments made to shareholders by a corporation are subject to personal income tax reporting and payment by the shareholders. Additionally, the corporation must pay taxes on dividends because they are not tax deductible, unlike salaries and bonuses. As a result, dividends are subject to two separate taxes: one on the corporation and another on the shareholders. Because its owners often work for the company as employees, smaller firms rarely have this issue because they may pay their owners in the form of tax-deductible salary and bonuses rather than taxable dividends.
Taxes on S Corporations
Only normal corporations, sometimes known as C corporations, are subject to the taxes system detailed in this article. A corporation that has chosen to be treated as a S corporation, on the other hand, pays taxes in a manner similar to that of a partnership or limited liability company (LLC), with all business revenues and losses "passing through" the firm and being recorded on the owners' personal tax returns.
No deduction for pass-through taxes
Pass-through entities can qualify for a new income tax deduction thanks to the Tax Cuts and Jobs Act. Owners of sole proprietorships, partnerships, limited liability companies, and S corporations may deduct up to 20% of the entity's net income for income tax purposes from 2018 through 2025. Shareholders of regular C companies are not eligible for this deduction because they are not pass-through organizations.
A separate corporate income tax's advantages
There are certain advantages to having a different level of taxation, even though filing and paying taxes on a separate business tax return can take some time. Here are a few of them; however, a full explanation of the benefits and drawbacks of corporate taxes as it pertains to your particular circumstances should be obtained from a tax professional. Corporate taxation can be a significant disadvantage for some businesses, particularly those that may incur losses, engage in investing, or are about to be sold. This is a very intricate issue.
Lower Rate of Corporate Tax
From 2018, all corporate profits are subject to a flat tax of 21%. The top five individual income tax rates, which range from 22% to 37%, are lower than the 21% rate. When corporate profits are paid to shareholders, who are then required to pay individual income tax on those dividends, the benefit of the lower rates is mainly lost due to double taxation. To fund expansion and future growth, for example, many firms desire or need to keep some profits in the company at the end of the year. If it does, a single 21% corporate income tax will be applied to the money. Therefore, by keeping certain profits within the business, a corporation's owners can save money.
Contrarily, whether or not they take the profits out of the company, owners of sole proprietorships, partnerships, and LLCs are required to pay taxes on all business profits at their individual income tax rates.
Up to a certain amount, the IRS will permit you to leave profits in your corporation: Most organizations can safely retain up to $250,000 (at any given time) without incurring tax penalties (certain professional corporations may not retain more than $150,000).
Benefits of Fringe Taxes
A corporation can deduct the whole cost of fringe benefits supplied to employees, virtually invariably including the business's owners, and the owner-employees are not subject to tax on these benefits. This is another tax benefit of founding a corporation. Although owners who receive these perks typically pay taxes on their value, other corporate entities can also deduct the cost of certain fringe benefits as a business expense.

​If you have any questions about this article or similar matters, please contact our office, the Law Office of Yoel Molina, P.A., at fd@molawoffice.com or 305-548-5020.

Which is more beneficial to your business? A limited partnership or a partnership.
A business arrangement in which two or more owners—who are not husband and wife—share ownership of the company is known as a partnership (sometimes known as a general partnership). In contrast to a corporation, setting up your business as a partnership does not need you to submit any paperwork to the state. Unless the company officially forms as another sort of business structure, such as a corporation, limited liability company, or limited partnership, a partnership is constituted by default.
In a general partnership, each partner has the authority to actively manage or control the company. This implies that each owner has the power to make decisions that are both legally enforceable and affecting how the business is conducted. Each partner will have equal authority unless the partners establish a partnership agreement.
The personal liability of participants in a general partnership is unrestricted with regard to the obligations of the company. This implies that the partner may suffer losses beyond those resulting from his participation in the company; in such a case, personal assets may have to be used to settle business debts. The debts of the company are likewise "jointly and severably" owed by each partner in a general partnership. Each partner is equally responsible for the debts of the company, but each is also entirely responsible, according to the legal concept of joint and severable liability. Thus, even though a partner has already paid his portion of the total obligation, a creditor may still be able to collect what is owing to him from another partner if he or she cannot acquire it from one or more of the partners.
 
In contrast to a general partnership, a limited partnership needs a partnership agreement. The appropriate state agency must receive some details about the company and its partners (usually the secretary of state).
A limited partnership also has general and limited partners. A limited partner is one who bears some of the partnership's debts but not all of them. A limited partner's investment in the company is the maximum they may lose. Lack of management control is the price to pay for this limited liability: A limited partner cannot manage the company. He essentially has an investment in the company.
There must be at least one general partner in a limited partnership. The business is managed by the general partner or partners. They have the power to make decisions that are legally enforceable and are in charge of the day-to-day management of the company. Which partner or partners are responsible for what and who has what responsibility will be specifically stated in the partnership agreement. Additionally, general partners are personally liable indefinitely for all firm debts. Like participants in a general partnership, the general partners in a limited partnership are also jointly and severally accountable for the obligations of the company. The ideal option for you may be an LLC creation if you require a business kind that restricts the liability of all partners.
​
​If you have any questions about this article or similar matters, please contact our office, the Law Office of Yoel Molina, P.A., at fd@molawoffice.com or 305-548-5020.

A short rundown of the benefits and drawbacks of founding a Limited Liability Company (LLC):
 
The Benefits of LLCs
There are fewer corporate formalities.
Corporations are required to have regular board of directors and shareholder meetings, record documented corporate minutes, and file yearly reports with the state. An LLC, on the other hand, does not required to conduct frequent meetings, which lowers hassles and paperwork.
There are no ownership limitations.
S-corporations cannot have more than 100 stockholders, and each stockholder must be a natural person who is a US resident or citizen. An LLC is not subject to such constraints.
Capability to employ the cash accounting technique.
Unlike a C-corporation, which is frequently required to use the accrual method of accounting, most limited liability businesses can utilize the cash method. This means that earnings are not earned until they are received.
Possibility of putting membership interests in a living trust.
Members of an LLC have the option of transferring their membership interests to a living trust. It is difficult to place S-corporation shares in a living trust.
Loss deductibility.
Members who are active participants in an LLC's business can deduct its operating losses from their regular income to the extent allowed by law. Shareholders of an S-corporation can deduct operating losses, but C-corporation shareholders cannot.
Tax parity. For tax purposes, LLCs are treated as "pass-through" entities by default, similar to a sole proprietorship or partnership. This means that LLCs are not taxed twice. In addition, an LLC owner is exempt from paying unemployment insurance taxes on his or her own salary. An LLC, on the other hand, can elect to be taxed as a corporation, either as a C-corporation or an S-corporation.
 
Drawbacks
Profits are taxed for social security and Medicare.
In some cases, LLC owners may end up paying more taxes than corporation owners. Salaries and profits of an LLC are subject to self-employment taxes, which currently total 15.3%. Only salaries (not profits) are subject to such taxes in the case of a corporation.
Profits must be recognized immediately by owners.
A C-corporation is not required to distribute its profits to its shareholders as a dividend right away. This means that C-corporation shareholders are not always taxed on the corporation's profits. Because an LLC is not subject to double taxation, its profits are automatically included in the income of its members.
 
Fewer ancillary benefits.
​ Employees of a limited liability company who receive fringe benefits such as group insurance, medical reimbursement plans, medical insurance, and parking must treat these benefits as taxable income. Employees who own more than 2% of an S-corporation are subject to the same rules. Employees of a C-corporation, on the other hand, do not have to report their fringe benefits as taxable income.

​If you have any questions about this article or similar matters, please contact our office, the Law Office of Yoel Molina, P.A., at fd@molawoffice.com or 305-548-5020.

Step-by-step guide to starting a limited liability company (LLC).

1.What Name Should I Pick for My LLC?
Your LLC's name must adhere to state regulations. Although these laws vary, most states demand:
It is required that your LLC's name comply with two requirements:
   1. It must end with an LLC designator, such as Limited Liability Company or Limited Company, or an abbreviation of one of these terms; and
   2. that the name is unique and has not already been registered with your state as the name of another LLC or commercial organization.
You can frequently reserve your LLC name for a brief period of time until you submit your articles of formation for a nominal price.

2. How Do I Create an LLC?
You must submit articles of formation to your state's corporate filing office, frequently the Secretary of State, in order to establish your LLC. Instead, the phrase "certificate of formation" is used in Delaware, Mississippi, New Hampshire, New Jersey, and Washington. Massachusetts and Pennsylvania are two additional states that refer to the document as a "certificate of formation."
The articles of organization can typically be completed online or with a form found on the website of your secretary of state. You will require the name of your LLC, the name and address of its registered agent, as well as other essential details like how the LLC will be run or the names of the LLC owners. When you submit the articles, you will be required to pay a filing fee. The costs are relatively low in most jurisdictions, hovering around $100.
 
3.What Conditions Apply to Registered Agents?
A registered agent is essential for LLCs. This is a person or business that consents to accept court documents on behalf of the LLC if the company is sued. In the state where the LLC is registered, the registered agent needs to have an actual street address. The majority of states keep a registry of for-hire commercial registered agents who will act as agents for serving of process. A member of the LLC may serve as its registered agent.

4.Should My LLC Be Managed by Members or Managers?
The majority of small LLCs opt to be run solely by their members, although LLCs can name one or more people (from outside the LLC) to run it, just way a board of directors runs a corporation. Managers vote on important matters like borrowing money, buying property, or altering strategic goals.

5.How Do I Write an Operating Agreement for an LLC?
You should draft an operating agreement when forming your LLC, despite the fact that the majority of states do not mandate it. This internal document lays out how your LLC will be administered as well as how it will be operated. If your LLC does not have an operating agreement, state law will control its operations.
With the help of Law office of Yoel Molina, you can complete all the necessary paperwork and formalities to form a limited liability company.

6.What Tax and Regulatory Requirements Are There?
​There can be additional tax and legal requirements for your LLC. These consist of:
EIN: Even if your LLC has no employees, each additional member must obtain their own IRS Employer Identification Number (EIN). If you form a one-member LLC, you only need to get an EIN if the LLC will employ people or if you want it to be taxed as a corporation rather than a sole proprietorship (disregarded entity). By submitting an online EIN application on the IRS website, you can get an EIN.
Business licenses: Your LLC may require additional municipal and state firm licenses, depending on the nature of your LLC's operations and the location of your business. To confirm that you are legitimately registered, licensed, and allowed to conduct business in your state, contact the relevant state offices.
Sales and Employer Taxes: In some circumstances, such as when you will be employing people or when you will be selling items and collecting sales tax, you must register with the relevant state taxing body.
 
7. How Should Annual Reports Be Filed?
LLCs must submit an annual report to many states along with a filing fee. These costs can be substantial in some areas; in California, they can go as high as $800 annually.
8. Is My LLC Able to Operate in Other States?
You must register your LLC in the state where you intend to conduct business and designate a registered agent to receive service of process if you want to conduct business there. 

If you have any questions about this article or similar matters, please contact our office, the Law Office of Yoel Molina, P.A., at fd@molawoffice.com or 305-548-5020.