Purchase Agreement on an Existing Business

[QSEQB6]

What is the name of your state (only U.S. law)?TN

I'm considering buying a clothing alterations business. Current owner has not reported sales taxes and I plan to report sales taxes. Not knowing how much back taxes she owes, should I still proceed with the purchase? Is there a way to structure the purchase agreement so that I'm not liable for her debt and potential claims? Should I consider an asset purchase in lieu of a business purchase? If I do end up getting dilinquency notices how difficult is it to confront the IRS or local IRS or creditors to leave me alone? Is it as simple as showing them the agreement?
Any sources would be appreciated.

 

[tranquility]

What is the name of your state (only U.S. law)?TN

I'm considering buying a clothing alterations business. Current owner has not reported sales taxes and I plan to report sales taxes. Not knowing how much back taxes she owes, should I still proceed with the purchase? Is there a way to structure the purchase agreement so that I'm not liable for her debt and potential claims? Should I consider an asset purchase in lieu of a business purchase? If I do end up getting dilinquency notices how difficult is it to confront the IRS or local IRS or creditors to leave me alone? Is it as simple as showing them the agreement?
Any sources would be appreciated.

The decision to buy the stock of a business or the assets of a business depends on many factors. But, while you can have the seller indemnify you in the case of a stock purchase, the business is still liable for the taxes up front.

 

[LdiJ]

What is the name of your state (only U.S. law)?TN

I'm considering buying a clothing alterations business. Current owner has not reported sales taxes and I plan to report sales taxes. Not knowing how much back taxes she owes, should I still proceed with the purchase? Is there a way to structure the purchase agreement so that I'm not liable for her debt and potential claims? Should I consider an asset purchase in lieu of a business purchase? If I do end up getting dilinquency notices how difficult is it to confront the IRS or local IRS or creditors to leave me alone? Is it as simple as showing them the agreement?
Any sources would be appreciated.

Either don't buy the business at all, or make sure that you only buy the assets of the business. If the business premises are leased, make sure that you are approved to assume that lease before you close on the sale.

 

[quincy]

What is the name of your state (only U.S. law)?TN

I'm considering buying a clothing alterations business. Current owner has not reported sales taxes and I plan to report sales taxes. Not knowing how much back taxes she owes, should I still proceed with the purchase? Is there a way to structure the purchase agreement so that I'm not liable for her debt and potential claims? Should I consider an asset purchase in lieu of a business purchase? If I do end up getting dilinquency notices how difficult is it to confront the IRS or local IRS or creditors to leave me alone? Is it as simple as showing them the agreement?
Any sources would be appreciated.

You are located in Florida but the business property you are considering buying is located in Tennessee?

Here is a link to "Avoiding Successor Tax Liability in a Sale of Business Assets," written by Raymond P. Carpenter for the American Bar Association Business Law Section (Volume 18, Number 2, November/December 2008). Although written in 2008, the information provided is still useful in 2014 (although there may have been some changes in state laws).

http://apps.americanbar.org/buslaw/blt/2008-11-12/carpenter.shtml