Purchasing an existing business can be complicated and may require the assistance of legal and tax professionals.
New owners are advised to do their homework by researching not only the current financial and tax status but also any underlying issues such as labor and customer relations. The previous owner should be forthcoming with any requested documentation including existing license or registration numbers and certificates associated with the business. As the new business owner, you may be liable for the previous owner’s actions. It is up to the new owner to protect themselves and take the necessary steps to minimize their risk.
In the words of the Connecticut Department of Revenue Services (DRS), to avoid successor liability the purchaser must obtain a Tax Clearance Certificate for sales and use taxes or admissions and dues tax, or both, before purchasing an existing business. The purchaser of the business should request a Tax Clearance Certificate between the time the purchaser commits to buy the business and at least 90 days before the closing. DRS has 60 days from the date that all required information is received to either issue a Tax Clearance Certificate or an escrow letter to the purchaser. To obtain a tax clearance, follow the directions in IP 2011(16).
Contact the agency: 1-800-382-9463 (Connecticut only), (860) 297-5962 or email@example.com Agency website: www.ct.gov/drs
According to the Connecticut Department of Labor, the purchaser of an existing business that had employees will become a full or part successor of the previous employer's unemployment liabilities. When registering for the unemployment insurance tax (UC-1A) you will need to know the following information:
- Will you be acquiring all or part of the employees, assets, organization, trade name and business of the previous employer?
- Trade Name
- Name and address of previous employer
- Previous employer's registration number
- Will the employer remain in business in Connecticut?
Contact the agency: (860) 263-6550 or firstname.lastname@example.org Agency website: www.ctdol.state.ct.us
Each agency handles changes differently. For more information contact the individual agencies directly. Agency websites can be accessed online at www.ct.gov and select Quick Links and then State Agencies
Buying An Existing Business
Buying a Business: What You Need to Know
Business Registration and Licensing
From a business registration standpoint, you will need to register as a brand new business.
Business registration checklists, as well as additional licensing information is available online at www.CT-CLIC.com, Or contact us at 1-800-392-2122.