Does buying a business name mean a transfer of ownership for the business?By Nina Kaufman, Esq.
Q.: What steps do I need to take to purchase a business name from my uncle? The business name belongs to my uncle, and he is going to sell all rights to the name to me. How do we start the process, and where do we go to get the transfer of ownership done legally? Am I actually buying the LLC?
A.: The best place to start the process of buying an asset of another company (be it the name, customer list, inventory, or any other item) is with an attorney. You’ll want to be very clear about what you’re buying and what’s involved in the transfer of ownership – is it just the name, or are there obligations (such as debts) that go along with it?
Regarding transfer of ownership of the name itself, have you done your due diligence to make sure that there is no “bad will” connected with the name? Also, does your uncle intend to stay in his own business? If so, he’ll have to change the name of his company. If your uncle has trademarks or other intellectual property connected with the name, you’ll want to address that, too, in a written agreement covering the transfer of ownership.
Once you have worked out the terms, only then do you want to file any necessary papers with your state’s Secretary of State. All the more reason to start with an attorney who will identify in advance the issues you need to address.
What other law questions do you have about transfer of ownership and closing a business?
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