What is a Business Bill of Sale?
A Bill of Sale is a document that contains in writing the details of a sale of goods or transfer of property from one party or another. In the case of a Business Bill of Sale, it can concern the transfer of goods related to a business or the transfer of ownership of the business itself.
Generally, a bill of sale is drafted by the party that is selling a particular thing (in this case, the “Seller”, and includes the details of the transaction to be made. The party that is buying a good, business, or other kinds of valuable (the “Buyer” in this case) may also bring their own bill of sale, though this is not as common as it is usually provided by the Seller.
For smaller transactions like regular retail purchases, purchase receipts can be considered as a bill of sale, as they contain the specific items that have been sold to the buyer and the agreed-upon price for each item. However, bills of sale are most often used in the case of large transactions, such as with vehicles or even entire businesses.
Bills of sale are important in order to ensure that both the buyer and seller are protected by the terms of the agreements outlined in the bill of sale. In the case of disagreements or other such legal troubles that may arise in the future, a bill of sale is valuable for providing information on the transaction itself and what the terms agreed to by both parties were.
There are different types of bills of sale.
- Absolute Bills of Sale are not drafted with the intent of providing security for either party. Instead, they are documents that serve as evidence of assignments, transfers, and other assurances of personal chattel (non-real estate property), and the method through which these transactions are paid for. These kinds of bills of sale are effectively not much more than simple proofs or contracts of sale, covered by common and sale of goods laws. The condition of the property being sold is also included in an absolute bill of sale, with no guarantees being required on the Seller’s part to reimburse the Buyer for any future breakdowns, injuries, or other such malfunctions of the property being sold.
- Conditional Bills of Sale essentially create stipulations that the buyer must follow in order to retain ownership of an item. Examples of such stipulations can include paying a monthly fee, or not attempting to sell the product or property to anyone without the original owner (the Seller)’s permission. Failure to comply with the requirements on a conditional bill of sale will result in the relevant property being repossessed.
This business bill of sale is an example of an absolute bill of sale, as the seller need only be paid by the buyer for the purchase and transfer of ownership of the business. There are no additional requirements surrounding the continued ownership of the business by the buyer.
Who needs to use a Business Bill of Sale?
Bills of sale are valuable in many different kinds of transactions, as even absolute bills of sale can serve as useful records of transactions, which can be important for various purposes in the future.
- Sellers, or any party that is looking to sell a major property like a business, lot, or vehicle, will often be the ones to create the initial draft of a bill of sale. Negotiations regarding the amount of money to be paid or any particular conditions that have been set in order for a buyer to retain ownership of the property (in the case of conditional bills of sale) will often occur both before and after said initial draft.
- Buyers may also draft a bill of sale themselves, though most Sellers will provide the bill of sale anyway. Having a copy of the bill of sale for any particular transaction is also beneficial for buyers, serving as both proof of purchase and as evidence of the original terms agreed upon in the transaction, in the event that the transaction would need to be reviewed in the future.
How to fill out a Business Bill of Sale?
The Business Bill of Sale is a very simple and easy form to fill out. Make sure, however, that you have the necessary documents with you to confirm the terms of the agreement, and that you have read and properly understood the contents of the bill of sale.
Enter the date that the bill of sale was signed and the names and addresses of the parties serving as the Buyer and Seller.
Enter the name of the business or property being sold, the state it is located in, and its main address.
Enter the agreed-upon price of the business or property being sold.
Enter the agreed-upon date by which the business or property should have been fully paid for.
To signify their willingness to share details about the operations and condition of the business or property being sold, the Seller must enter their signatures and their names in the spaces provided with a notary to witness the signing.
Do not sign the form before contacting and meeting with a notary. In most cases, a notary must personally witness a person signing the form or agreement in order for them to be able to properly verify that all parties or their representatives signed the form, themselves.
Contact and visit a notary. Make sure that both Buyer and Seller bring a government-issued, official ID with a picture, such as your Driver’s License or your Passport, in order to serve as proof of identity.
After the notary has verified your identities, the Seller must sign the “Agreement” section of this form, and allow the notary to stamp and sign this form in the space provided.
You may need to pay some fees to the notary, depending on the state, so make sure to do so for their service.
Tips when filling out a Business Bill of Sale
While this bill of sale is a very simple form to fill out, it is important to make sure that it is filled out properly in order to avoid future issues surrounding the purchase of the business or property or the nature of the transaction made.
Have relevant documents available for reference. If there are any pertinent documents you possess that contain important information on the transaction, make sure to have them ready to consult and ensure that all information you enter on the form is correct and updated. This will help you avoid any issues regarding the validity of the transaction and any possible legal matters related to the transaction in the future.
A notary is not a lawyer. A notary’s primary purpose is to prevent fraud, and as such will verify the identities of the parties involved in signing the document and ensure that all signatures are entered with a person’s free will and consent. They will not give advice regarding the contents of any form or the details of any transaction. Seek an attorney if you require legal advice before having your document notarized.
Practice good contract management. Both parties should create a copy of this agreement and store it in a safe and organized area in the event that it might be needed for consultation in the future for any legal matters.