Posted on: 17 March 2015
One scenario in business where you absolutely need the assistance of a corporate attorney is regarding the sale of a business entity. Whether you are selling a multi-billion dollar corporation or small sole proprietorship that's been in the family for generations, a corporate lawyer can ensure that the sale is structured in your best interest and in full compliance of the law.
The following article outlines three of the most important aspects of a business sale and why enlisting an attorney who specializes in corporate law is essential to the transaction's success:
Regarding The Imposition Of Restraints
Many times, the individual intent on purchasing your business wants to ensure that, once the business is his, you won't open up shop next door and suddenly become a competitor. While most understand the intent of such a request, one party's attorney might phase the agreement in such a way as to make it difficult for you, the seller, to open up any business of any kind.
You may want to open up another business in the same field in another part of the state, or country, or at some date in the future, and you need an attorney to ensure that the parameters of the restraint aren't too restrictive. As an entrepreneur, you have the right to open up shop again when and where you like, so long as you don't intentionally impede the operations of the purchaser.
Concerning Potential Taxation
A corporate attorney can also advise you on the optimal sale strategy for the most advantageous taxation. Selling a business is generally subject to strict and potentially steep taxation. When selling your business you want to enlist the assistance of a corporate attorney who is familiar with statutes concerning capital gains taxation and other corporate sales taxation.
On the subject of taxation, you should know that the rate at which you are taxed during the sale is affected by the manner in which you allocate the sales price. Price allocation refers to the specific breakdown of different components of the business and the price that each component will be sold for.
This affects taxation because intellectual property and trademarks are taxed at different rates than machinery and equipment. Overall, you want an attorney that understands the legal boundaries of price allocation and can structure it so as to be mutually beneficial to both parties.
In the end, there are numerous reasons for hiring an attorney who specializes in corporate law, but his expertise regarding restraints and taxation are certainly among the most important.Share