A business bill of sale is an important and necessary component to complete when selling or buying a business. The bill of sale is often legally necessary for a business sale.
When completing a bill of sale for business, you can use a template to ensure that all required components are included. The business bill of sale template is an effective guide that walks you through the steps needed to complete the transaction.
What is a Business Bill of Sale?
A business bill of sale is a legal document that recognizes the change in ownership from one entity to another.
Buyers and sellers agree upon the key terms of the sale, including the purchase price and other particulars. It’s often the culmination of negotiations between a buyer and seller and is designed to detail the specifics related to the sale.
The bill of sale is proof of a business ownership transfer. Depending on the type of business, the bill of sale may include information on stock or share transfers and other company assets. It may also include information about the role of the previous owners in the business following the sale.
State and local governments often rely on a bill of sale to determine proof of ownership. Submitting a bill of sale is often necessary to transfer licenses and permits or complete registrations for the new owners. Without a bill of sale, business ownership may be disputed.
Business Bill of Sale vs. Business Purchase Agreement
There is a significant difference between a business bill of sale and a business purchase agreement.
The purchase or sale agreement is designed to help negotiate a future sale or purchase of a business. It is often used in the initial stages of negotiation about the transfer of a business. Some consider it a draft of the future business bill of sale, a legal, formal document that details final terms.
It’s a way to determine the structure of the business, what’s for sale, and various considerations. It may include suggested sale prices, the assets for sale, and the terms and conditions of a potential sale.
It may be used to draft the terms of the sale following negotiation. It can also spell out any conditions necessary for the buyer or seller to complete before a sale is finalized.
Once those conditions are met, the parties often move to a business bill of sale.
What to Include in a Business Bill of Sale
Determining what to include in your bill of sale is fairly straightforward. There are standard items to complete, though additional items may be necessary based on local or state laws. The typical items are:
- Sale date. This is the date when the sale is completed, not when the document is completed
- Buyer name and address. List the legal name and mailing address of the buyer
- Seller name and address. List the legal name and mailing address of the seller
Business name and details. Be sure to include the following:
- State of incorporation. This is the state where the business is legally formed
- Address of the main headquarters
- Assets, shares or interests, and property. Include all assets to be included in the sale and other interests.
- Purchase price. The final financial terms of the purchase
- Date of money transfer. This indicates when ownership formally transfers and reflects the date the money transfer will appear in the seller’s account
- Signatures and dates. Both the buyer and seller should sign and date the bill of sale
- Witnesses. A least one witness should document the signing and include their name, signature, and date
- Certificate of Acknowledgement. You should have a public notary witness and acknowledge the signatures in person
What are Assets and Shares in a Business Bill of Sale?
A buyer can acquire a business in one of two basic ways. One is an acquisition of the shares or interests of the business, known as a stock sale. The other is a purchase of the business assets, an asset sale. Each type has tax and liability consequences.
A stock sale is a simpler process that typically involves a single bill of sale. However, a buyer can have more liability in such a transaction. The buyer is responsible for pre-sale liabilities, including defective products, warranty commitments, and tax obligations.
In an asset sale, there can be additional complexity and may require multiple documents. With an asset sale, the buyer has more control and can negotiate which assets they will purchase. For example, the buyer can contractually limit their liability within a bill of sale for business assets.
How to Write a Business Bill of Sale
Here’s a closer look at the steps necessary to complete a business bill of sale.
Step 1 – Complete Basic Information on Buyers and Sellers
Begin by dating the bill of sale and filling in all buyers’ and sellers’ legal names and addresses.
Step 2 – Detail Company Information
Include the state where the company is incorporated, the address of its headquarters, and all assets, shares or interests, and property that will be included in the sale.
Step 3 – Include the Purchase Price
Fill in the purchase price, including any terms and payment schedules in the final sale agreement.
Step 4 – Sign, Witness, and Notarize
You will want to have the business bill of sale notarized. In person, you will sign the bill of sale in the presence of a public notary and have it witnessed.
Business Bill of Sale Sample
A business bill of sale template is an easy, convenient way to complete the necessary legal documentation. The template below includes all the information needed to finish your transaction.
Documents Required During a Business Sale
You will likely need multiple documents when negotiating and preparing a business bill of sale. Here is a list of some of the most common documents necessary when selling a business:
- Records of all assets that are part of your business
- Operating manuals
- List of employees and payroll obligations
- Revenue records and completed tax forms for the past 3-4 years
- Financial statements
- Bank statements
- Pictures of your business and its assets
- Non-disclosure forms
- Licenses and permits
- Insurance records
- Client, supplier, and vendor contracts