Buying, Closing or Selling a Business – Making Sales in California
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Buying, Closing or Selling a Business – Making Sales in California


[music] Hi, I’m Greg. Welcome to Buying, Selling or Closing a Business. In this video we will talk about what you need to know when buying, selling, or closing your business. We’ll also discuss what change of
ownership is, and what to do if there’s a change of ownership of your business.
First, let’s discuss buying a business. When buying a business or its inventory
you should request a Certificate of Tax Clearance from your nearest office
before closing escrow. A tax clearance is a document that will protect you from
having to pay any sales or use tax owed by the previous owner, as well as
interest in penalties that may be owed. To find your nearest office, visit our
website. If you don’t obtain a tax clearance before you buy a business,
and the previous owner has tax amounts unpaid, you could be required to pay the
tax liability as well as interest and penalties of the previous owner. If the
seller has an outstanding liability, you are required to withhold the amount owed
from the purchase price until you have proof from the seller that the liability
has been paid. For more information on tax clearances, please see Publication 73,
your California seller’s permit. Remember a seller’s permit, license, or account,
does not transfer with the business. When buying a business, you may need to
register for one or more of your own permits, licenses, or accounts, using our
online registration system. Now let’s discuss changes in your business.
If you already have a business and you want to add other locations, you must
register each additional location for the applicable permit license or account.
To do so, use our online registration system. Be sure to notify us about
business changes to all of your permits, licenses, and accounts. Registering each
location properly will help ensure you accurately report and pay your taxes or
fees. If you have a change in ownership or business entity type, you generally
will need to close out your permit license or account, and register the new
business. The most common types of business entities are: sole
proprietorship, partnership, corporation, and limited liability company. For
example, if you’re currently operating as a sole proprietor, and decide to
incorporate your business, you will need to close your existing seller’s permit
and register online for a new seller’s permit for your corporation. You will
need to do this for all other licenses and accounts registered with the CDTFA
as well. If you are operating as a partnership, you’ll need to contact the
CDTFA whenever a partner is added or dropped. Changing the partner in a
partnership does not necessarily require you to close your permit and open a new
one. However, if there is a change in entity type, you will need to close out
your permit and register as a new business. For example, let’s say you and
your spouse registered as a partnership and one of you withdraws from the
ownership of the business; this is a change in entity from a partnership to a
sole proprietor and requires a new registration for the business. A legal
separation or divorce decree awarding the business to one person, is not
sufficient notice for the CDTFA. Now let’s talk about selling or closing your
business. When you intend to sell or close your business, there are a few
things you need to do. If you sell or close your business, you need to close
your seller’s permit account and any respective licenses or accounts.
To do so, you need to complete and send a copy of form CDTFA-65, Notice of Closeout, to your local office. If you have additional CDTFA administered tax and
fee permits, fill out CDTFA-345-SP, Notice of Business Change. Closing your
account will help protect you from possible liabilities incurred by the
person who buys your business. You can find a copy of the forms in the Forms
and Publications section of our website. You must also file your final tax and
fee returns, and make any final payments on time. If you sell your
business, remember to report any sales of fixtures or equipment on your final
return. Keep in mind, the reporting period and due date of your final return may
change, depending on the tax and fee program, or the date you discontinue
operations. You can find a listing of filing due dates on our website.
Or if you need help figuring out when your final return is due, give us a call.
Remember, your permit is valid only as long as you are actively engaged in
business as a seller. If you’re no longer conducting business as determined by
your permit, license, or account with the CDTFA, you should close out your
accounts. Likewise, the CDTFA may cancel your permit if it finds that you’re no
longer engaged in business as appropriate to your permit or license
type. If you need more information on how to close out your account, please see
Publication 74, Closing out your Account, on our website. So, here are some things
to remember when buying, selling, or closing a business. Make sure you get a
tax clearance if you’re purchasing a business. Make sure all of your business
locations are registered and have the correct types of permits, licenses, or
accounts. When you close your business or change ownership types, let us know. And
if you’re ever unsure, give us a call at 1-800-400-7115. By taking these critical steps, you can avoid any penalties and interest and delays in your business operations. For more tips. explore our website, or watch our video series, Making Sales in California. Thank you for watching. And thank you for doing business in California.

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