There are plenty of great points about doing business in Arizona, compared to most states, but there are risks that a buyer should know about when buying a business in this state.
In Arizona, there is no state requirement for an escrow company, title company or broker to get approval or notice from a state agencies that the seller has outstanding debts to the state before closing escrow and transferring title of the business to the buyer.
The succession liability laws are tough in Arizona. Succession law mean that the person buying a business could be liable for the debts of the person who is selling the business.
To avoid this problem, a buyer should obtain a certifcate of complaince from the department of revenue in Arizona. Failing to get this document will make the buyer liable for the state debts the seller leaves behind.
Often, sellers and brokers will rush a deal to get it closed without getting this certificate. Why? The answer is obvious.
It could take 4-6 weeks for the seller to get the certificate. Often the seller owes the state money and the seller will avoid getting this. So watchout for those sellers and get that certificate.
To get the certificate google this "arizona department of revenue certificate of clearence" and print it out and have the seller complete it.
The great thing about buying businesses in Arizona is that deals can close quickly if the seller has prepared for a quick closing.
Mel Jones is one of the premier restaurant brokers in the nation having published hundreds of articles on buying and selling a restaurant and bar business, selling thousands of restaurants in CA., WA and AZ and building one of the most copied business models in the brokerage industry. Mel started SellingRestaurants in 2004 with the one simple concept, give the buyers the information they need to make intelligent buying decisions without being pestered by a broker or hiding information, prepare the business for market by researching key details that make or break deals and educate the buyer on the buying process to create an intelligent buyer. Prior to SellingRestaurants, Mel was a Chief Financial Officer for Universal Music Group, the largest music company in the world. There he participated in more than $11.5 billion of merger and acquisition transactions. He also work for top companies such as Nestle Foods, USA. He hold a Bachelors in Business Administration Finance as well as attened Law School at Gonzaga University. Give Mel a call at 480.274.7000 or e-mail him at [email protected] if you have any questions.