Purchasing or selling a business can be a complex and often overwhelming experience, both for the buyer and seller. There are various aspects that need to be considered, as well as careful consideration and disclosure of all potential liabilities that may surface. When buying or selling a business, there are different ways to go about the sale, but the three most common ways of acquiring a business are through either a stock purchase, an asset purchase, or a merger. It is important to know what each option entails to ensure the correct procedure is chosen to benefit both the buyer and seller in the sale of a business.

Naperville and Yorkville Letter of Intent Attorneys

A letter of intent is an initial letter expressing interest in purchasing a business or franchise. The letter of intent summarizes the buyer’s intention to purchase the seller’s business (or franchise). The letter of intent contains key terms and conditions for the proposed business sale.

Benefits of Letter of Intent

The Letter of intent provides a detailed description of the proposed business deal. The letter of intent provides a specific description of the timeframe proposed for completing the proposed deal. The letter of intent should summarize the following information:

• Prices and Terms such as the business to be acquired

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What is a Limited Liability Company (LLC)?

We’ve all heard the term LLC before but, do you know what it means and what it does? LLC stands for Limited Liability Company, which is a popular structure used to form a business. 

An LLC is essentially a mixture of the best parts of a Partnership business structure (including the tax benefits) and the best parts of a Corporation business structure (including the protection from personal liability). 

A real estate investor asked whether it was acceptable to purchase property through an LLC. The answer is “Yes”. The mortgage will be personally guaranteed by the members of the LLC (or owners of the LLC). The property deed can be titled in the LLC or otherwise known as the Limited Liability Company. Members of an LLC are the owners of the LLC. The owners of a corporation are shareholders. LLC members appoint managers to run the rental property business.

The LLC members pledge their personal assets as collateral to back the lender’s debt. Mortgage companies lend to individual owners of the LLC. The LLC may appear on the title to the rental property. However, the LLC members personally guarantee the mortgage and note. 

Benefits of Setting Up an LLC for Real Estate Investors or Landlords?

There are three major benefits of setting up LLCs for rental property. The three benefits are the following:

The purchase or sale of a vacant lot contrasts with a normal residential real estate transaction in Kendall County and surrounding areas of Oswego, Yorkville, Plano, Sandwich, and Somonauk. The “Vacant Lot Sales Contract” is the standard real estate contract used for the purchase and sale of a vacant lot. 

A vacant lot is a parcel of property or land that has no houses or buildings on it. Many people purchasing a vacant lot have the intention of building a new construction or customized home on the vacant lot. In my experience, most buyers of a vacant lot have the goal of building a new construction property within the next two to three years or earlier. Illegal dumping of waste and litter is a major issue involving vacant lot owners.

SIGN VACANT LOT SALES CONTRACT

The first step in selling a Vacant Lot is the filling out and acceptance of a contract. At Gateville Law Firm, we assist sellers and buyers with the completion of the Vacant Lot Sales Contract. The Vacant Lot Sales Contract involves twenty (20) provisions, which consist of the Vacant Lot Sales Contract.

What are the differences between a Limited Liability Partnership and a Limited Liability Company?

This article will discuss the differences between a Limited Liability Partnership and a Limited Liability Company. 

Limited Liability Partnership aka LLP

In 2021, the median value of a home in the state of Illinois increased almost 50% from the median value in 2012. 10 years ago the median home value in Illinois was $157,000. In 2021 Zillow reported that number to be just under $230,000. Now, in 2022, that number has grown over 11% in just one year to over $267,000. The increasing home value is great news for real estate investors and owners of investment properties. However, the IRS (Internal Revenue Service) can and will go after a seller’s gains through taxes. A 1031 Exchange is one way that investors in real estate can avoid certain taxes by the IRS. 

What is a 1031 Exchange?

A 1031 Exchange is a tool that real estate investors and owners of investment properties can use to protect their gains from the sale of property from being taxed by the IRS. 

26 U.S. Code §1031(a)(1) states: no gain or loss is recognized if property held for productive use in a trade or business or for investment is exchanged solely for property of a “like-kind” which is to be held either for productive use in a trade or business or for investment.

A Limited Liability Company is a hybrid between a Corporation and a Partnership. A Partnership is when two or more people join together to establish a business. The benefit of a partnership is the flexibility of business arrangements. A partnership can be any written benefit that two or more people envision. The drawback to a partnership is the lack of limited liability protection. The benefit of a corporation is the separation between a person’s assets and business liabilities. A Corporation provides limited liability protection for their owners or otherwise known as “shareholders.”

1. Limited Personal Liability

In this article, we will examine the benefits of LLCs. The first major benefit that we will discuss is limited liability protection. Prior to incorporating a business, many entrepreneurs are sole proprietorships or partnerships. Generally, establishing an LLC is a sign of maturity in business. Limited personal liability is the benefit of limiting the business liabilities to the business (or LLC). An LLC creates a separate legal entity, which is distinct from its’ owners. As a separate legal entity, the business owners and its’ personal liabilities are distinct from the business.

The first step in the sale of commercial real estate property is the execution of the Commercial Sales Contract. The Mainstreet Organization of Realtors is the main (but not the only) contract for commercial real estate deals.

Attorney Review Period

The first step in the sale of a commercial real estate purchase or sale is negotiation of the attorney review period. The attorney review period is Paragraph 6 of the Commercial Sales Contract. Paragraph 6, Attorney Review Period, is the ability of either the buyer or seller’s real estate attorney to approve the contract; disapprove the contract; and/or propose modifications to the contract except for purchase price. Business negotiations must be finalized within ten business days after acceptance of the contract by the Seller(s).

In most buyer’s attorney’s attorney review contract, there is a phrase about extending the attorney review period until an agreement is reached or either party disapproves of the contract. Therefore, the 10-business day deadline is often repealed.

Oswego and Kendall County Franchise Business Attorneys

The purchase or sale of a franchise is a major investment transaction. The process is complex and requires varying different legal documents, which require precision and understanding. The first step in the sale and purchase of a franchise is the letter of intent.

Letter of Intent Attorney in Kendall County and Nearby Areas

The Letter of intent or “LOI” is necessary for several reasons:

•  The Letter of Intent guarantees the franchise will be sold to the agreed buyer even if other potential buyers appear in the future. Thus, the LOI restricts the business deal between the buyer and seller.
• The Letter of Intent shows seriousness by the Buyer and usually will include earnest money or a down payment evidencing their seriousness.
• The Letter of Intent is the first step in consummating a business deal for the franchise purchase or sale.

The letter of intent summarizes the parties involved in the transaction, the deposit amount, the purchase price, and key terms such as how the deal is going to be financed and determines a buyer due diligence period. In summary, the letter of intent is a written and legal document declaring the buyer’s intentions to purchase a seller’s franchise.

Forming an LLC or otherwise called a Limited Liability Company in Illinois is a wise decision. The first step in filing an Articles of Organization, which is the official process to become an Illinois LLC is to pick a business name. An LLC’s business name must be different and distinguishable from other LLCs and Corporations registered with the Illinois Secretary of State.

Differing business names reduces confusion and promotes accountability. Under Illinois law, the LLC must end with LLC, L.L.C. or Limited Liability Company. There are advantages of forming an LLC. These advantages include the following:

·         Limited Protection for the Business Owners