Selling or Buying a Small Business/Bill of Sale


Bill of sale is proof of ownership? is that most important document to prove I am new owner?

I will be 3rd owner to buy this business, but the 2nd owner only has bill of sale, he did not renew business permit, police permit, health permit, lease, ficititious name.  What should I take over safely?

Dear JJ

Thank you for your question.

Yes, a Bill of Sale is a legal document that can provide evidence of ownership, but there are many other instruments used by banks, title companies, attorneys, and brokers to show ownership. I strongly recommend using a broker and a title and escrow company to handle the transfer, since they have documents they use every day that can add to your Bill of Sale and cover things it may not.

One major question is whether there is real estate involved as part of the business or not. If the transfer of ownership includes real estate, it is very important to use a title and escrow company, which will generate a preliminary title report to verify conditions of the property, liens, encumbrances, and things such as that. A Bill of Sale would not be adequate to transfer business interest AND title to property.

However there are many businesses bought and sold which do not include real estate; the buyer is only buying the equipment, fixtures, furniture, inventory, and the goodwill value of the business. In this scenario, I believe a Bill of Sale would suffice, but the real issue at hand is how much information is included in the document. Whether a Bill of Sale or an Asset Purchase Agreement or any other instrument is used, the document needs to show certain details of the transfer.

Some of those are:

- descriptions of assets
- description of inventory
- dates and times
- conditions
- lease information
- covenants
- contact info

The other items, such as fictitious business name and business permit, must be done through the municipal departments by showing documentation proving ownership, so they must be completed AFTER the sale has been finalized.  

Selling or Buying a Small Business

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Rhett Kniep, CBB


I advise others on how to value a business, how to sell a business, and how to buy a business, and give guidance on critical issues such as negotiation and growth strategies. I have knowledge and experience in real estate investing and raising investment funds.


I have been a licensed agent and broker for over 13 years, selling commercial real estate, residential real estate, and businesses. I am a licensed building contractor of more than 22 years, and have both designed and built commercial and business structures, in addition to selling them.

California Association of Business Brokers, Contractor's State License Board, CA Association of Realtors, Better Business Bureau

The Contractor Investor, published by Phi Logos Publishing 2011, by Rhett Kniep (book on real estate investing for building contractors) Ezine Articles Diamond Author Blog

Certified Business Broker, California Association of Business Brokers, AA communications and am a student at Lincoln Law School in Sacramento. I have done numerous trainings over the years in real estate investing, real estate sales, and marketing.

Awards and Honors
Stormy Sebring College scholarship, Service Award Good New Rescue Mission, Film School certificate

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