Get Free E-Book Today

Buying a Business with Co-Owners? You Need a Buy-Sell Agreement!

Are you considering purchasing an existing business with another party, be sure to consult a Mesa tax preparation professional with experience before doing so. If you are buying a business that will include more than one co-owner, you need a buy-sell agreement. You have multiple reasons to put a buy-sell agreement in place and not one reason not to have a buy-sell agreement.

 

A well-drafted agreement can do these valuable things for you:

 

  • Transform your business ownership interest into a more liquid asset
  • Prevent unwanted ownership changes
  • Save taxes and avoid hassles with the IRS

 

There are two types of buy-sell agreements: (1) cross-purchase agreements and (2) redemption agreements (sometimes called liquidation agreements). A knowledgeable tax preparation mesa professional will be able to make this process simple for you and your co-owner.

 

When you enter into a cross-purchase agreement, it’s a contract between you and the other co-owners. Under the agreement, a withdrawing co-owner’s ownership interest must be purchased by the remaining co-owners when a triggering event occurs, such as death or disability.

 

When you enter into a redemption agreement, it’s a contract between the business entity itself and its co-owners (including you). Under the agreement, a withdrawing co-owner’s ownership interest must be purchased by the entity when a triggering event occurs. If you would like more information or have questions about this topic please contact the tax preparation Mesa professionals at BASC Expertise for assistance.Mesa Tax Preparation

Scroll to Top