Business Law in Shelby County
Buying, Selling, or Closing a Business in Columbiana, Alabama
A business changes hands once, and most owners only do it once in their lives. The buyer wants to know exactly what they are getting and what they are not. The seller wants to get paid and walk away clean. An owner closing up wants the door shut properly so nothing follows them home. Carden Legal Services handles all three for owners in Columbiana, Shelby County, and Central Alabama: purchase and sale agreements, due diligence, closings, and formal dissolution. Grady Carden does the work himself and explains the fee before anything starts
Three owners at three different tables
You are buying.
A business you have worked in, a competitor, a shop whose owner is retiring. You want to pay for what is actually there and not inherit what is not on the balance sheet.
You are selling.
After years of building it, you want the price you deserve, paid the way you agreed, with no phone calls two years later about something the buyer says you should have disclosed.
You are closing.
The business has run its course, or you are retiring with no buyer. You want the company wound down so that creditors, the state, and the IRS are all finished with it, and so are you.
BUYING A BUSINESS
Decide what you are buying.
The first decision shapes everything after it.
| Asset sale | Entity sale | |
|---|---|---|
| What you buy | Specific assets: equipment, inventory, name, customer list, chosen contracts | The company itself: LLC interests or corporate stock |
| What you take on | Only the liabilities you agree to assume | Everything the company owes or may owe, known and unknown |
| Contracts and leases | Each one must be assigned, usually with the other party's consent | Stay with the company, subject to change-of-control clauses |
| Licenses and permits | Often must be reapplied for | Often stay with the company |
| Who usually prefers it | Buyers | Sellers |
| Tax | Different results for each side. Decided with both CPAs. |
Most small-business purchases in Alabama are asset sales. There are good reasons to buy the entity instead: a license or contract that cannot be transferred, a lease the landlord will not reassign. When that is the case, the agreement has to work harder to protect you from what you are inheriting.
Start with a letter of intent.
A short, mostly non-binding document that fixes the price, the structure, the timeline, and exclusivity while due diligence happens. It keeps both sides from spending money on a deal that was never going to agree on terms.
Do the diligence.
Financial statements and tax returns. The lease and whether it can be assigned. Customer and vendor contracts and their termination rights. Employee arrangements. Licenses and permits. Liens on equipment (a UCC search). Pending or threatened claims. The seller's standing with the Alabama Department of Revenue and the Secretary of State. For a small business this takes days, not months, and it is where the price gets confirmed or renegotiated.
Sign the purchase agreement.
The document that says what is being sold, for how much, paid how, and what each side promises. The seller's representations about the business and what happens if they turn out to be wrong. Conditions that must be met before closing, including the Alabama tax certificate described in section 5. Non-compete and transition help from the seller. Who gets the deposit if the deal falls through. We draft it for buyers and review it for buyers who are handed the seller's version.
Buying with a new entity? Most buyers form a fresh LLC to take the assets. See business formation and LLC formation
Selling a business
Get the house in order first. The buyer's attorney will ask for your operating agreement, your organizational records, your contracts, your licenses, and your tax filings. If the operating agreement was never signed or the record book is empty, that is a discount the buyer will take or a delay you will pay for. Six months before you list is the time to fix it. See operating agreements [plain text link until live].
Know what buyers' attorneys look for. Clean title to the assets, with no undisclosed liens. Contracts that can be assigned. A lease with enough term left to be worth buying. Employees who will stay. Taxes that are current, with proof. The fewer surprises in diligence, the closer the final price stays to the agreed one.
Choose the structure with your CPA. Asset sale or entity sale, lump sum or installments, and how the price is allocated among the assets all change what you keep after tax. We handle the legal side and coordinate with your accountant so the agreement supports the tax plan rather than fighting it.
Limit what follows you. The representations you make about the business should be true, specific, and time-limited. The non-compete you give should be the one Alabama will enforce, not a longer one you are stuck with. If part of the price is paid over time, the note should be secured by the business you just sold. Transition help should have an end date.
WHAT ALABAMA REQUIRES IN A SALE
Three Alabama rules that change the deal
01
The buyer is on the hook for the seller's sales tax unless a certificate says otherwise.
Alabama law requires the purchaser of a business to withhold enough of the purchase price to cover the seller's unpaid sales and use taxes, unless the seller produces a certificate from the Alabama Department of Revenue showing the taxes are paid or none are due. A buyer who closes without the certificate or the holdback is personally liable for the seller's tax bill. We make the certificate a closing condition in every purchase agreement we draf
02
A seller's non-compete is enforceable, with a one-year presumption.
Alabama's Restrictive Covenants Act specifically permits a non-compete given with the sale of a business's goodwill, and a restriction of one year or less is presumed reasonable. Longer terms have been enforced but carry more risk. Buyers who want more than a year should say why in the document. See business contract
03
The paperwork does not transfer itself.
The business name may need a new reservation or a transfer of the existing one. Sales tax licenses, local business licenses, and professional licenses are usually reissued to the new owner, not assigned. Real estate included in the deal moves by deed, recorded in the county. If the deal is an entity sale, the Secretary of State records and registered agent need updating. None of these are hard; all of them are missed when nobody owns the checklist
Closing a business the right way
Walking away is not the same as closing. A company that stops operating but is never dissolved keeps existing on paper: it stays subject to the Business Privilege Tax until it is legally dissolved, its registered agent obligations continue, and its contracts and potential claims stay open with no procedure for cutting them off. Formal dissolution is inexpensive and it ends things. Here is the sequence for an Alabama LLC; corporations follow a parallel path.
Approve the dissolution. By the vote the operating agreement requires, documented in writing. If the agreement is silent, Alabama's default rules govern the vote.
Wind up. The company continues to exist for this purpose only: collecting what it is owed, paying what it owes, ending the lease and other contracts, canceling licenses, and selling or distributing the remaining assets.
Notify known creditors. Alabama allows a dissolved company to send each known claimant a written notice giving at least 120 days to submit a claim. A claim rejected in writing generally must be sued on within 90 days. Publishing a notice in the county newspaper can bar other claims after two years. These steps are optional under the statute, and they are the reason a properly closed company stops hearing from people.
Clear the state's taxes. Obtain a Certificate of Compliance from the Alabama Department of Revenue and file final returns, including the final Business Privilege Tax return. Close the sales tax and withholding accounts.
File Articles of Dissolution. With the Alabama Secretary of State, $100 filing fee.
Distribute and keep records. What is left goes to the owners in the proportions the operating agreement sets. The company's records are kept for the years that follow, because questions do come.
For many Shelby County owners, the succession plan is a sale: to a key employee over several years, to a family member, or to an outside buyer when it is time. The purchase agreement, the buy-sell agreement, and the owner's estate plan need to agree on who can sell, at what price, and what happens to the proceeds. A sale to a child that the will does not account for can leave the other children with a very different inheritance than the parent intended. A sale that closes while the owner's trust still holds the ownership interest needs the trustee's signature, not the owner's.
We draft the sale alongside the succession and estate documents so they tell one story. See Business Succession and Buy-Sell Agreements [plain text link until live] and, for owners who hold the company in a trust, revocable living trusts.
WHEN A SALE IS THE SUCCESSION PLAN
Selling is how most succession plans end
For many Shelby County owners, the succession plan is a sale: to a key employee over several years, to a family member, or to an outside buyer when it is time. The purchase agreement, the buy-sell agreement, and the owner's estate plan need to agree on who can sell, at what price, and what happens to the proceeds. A sale to a child that the will does not account for can leave the other children with a very different inheritance than the parent intended. A sale that closes while the owner's trust still holds the ownership interest needs the trustee's signature, not the owner's.
We draft the sale alongside the succession and estate documents so they tell one story. See Business Succession and Buy-Sell Agreements and, for owners who hold the company in a trust, revocable living trusts.
Selling to family or a key employee?
Those deals need the same documents as a sale to a stranger, with one more: a written understanding, among the people who are not buying, of why the terms are what they are.
Fees and how it works
Fees explained before work begins Business formation at Carden Legal Services is generally handled on a flat-fee basis. The fee depends on the entity and the documents it needs, and you will know it before any drafting starts. State filing fees are separate and are passed through at cost. Complex ownership structures may require a different arrangement, and that is discussed up front.
What to expect
Tell us about the deal or the decision. Buying, selling, or closing, and where you are in the process. If there is a letter of intent, a broker's contract, or an offer, send it ahead.
Get a plan and a fee. What has to happen, in what order, who else needs to be involved (CPA, lender, landlord), and what it will cost.
Diligence and drafting. We run or review the diligence and draft or mark up the agreements. Every open issue is explained in plain English before you decide.
Close, or dissolve, and finish the checklist. Signatures, filings, licenses, and the state certificates that keep the deal from following you.
Frequently asked questions
What is the difference between buying a business's assets and buying the company itself?
In an asset sale, the buyer purchases specific things: equipment, inventory, customer lists, the name, contracts the buyer chooses to take. The seller's company and its history stay with the seller. In an entity sale, the buyer purchases the ownership interests, LLC membership or corporate stock, and gets the whole company, including its debts, contracts, and past liabilities, known and unknown. Buyers usually prefer asset sales. Sellers often prefer entity sales. The choice drives the tax result, so it is made with both sides' CPAs at the table.
What does due diligence involve when buying a small business?
Confirming that what you are buying is what you were told. Financial statements and tax returns, the lease and whether it can be assigned, customer and vendor contracts, employee arrangements, licenses and permits, any liens on the equipment, pending or threatened claims, and the seller's standing with the Alabama Department of Revenue and Secretary of State. For a small business, the list is shorter than for a large one, but skipping it is how buyers inherit problems they did not price.
If I buy a business in Alabama, can I be liable for the seller's unpaid taxes?
Yes, for sales and use taxes. Alabama law requires the buyer of a business to withhold enough of the purchase price to cover the seller's unpaid sales and use taxes, unless the seller produces a certificate from the Alabama Department of Revenue showing the taxes are paid or none are due. A buyer who closes without that certificate or that holdback can be held personally liable for the seller's tax bill. The purchase agreement should make the certificate a condition of closing.
Can the seller agree not to compete with me after the sale?
Yes. Alabama's Restrictive Covenants Act specifically allows a non-compete given in connection with the sale of a business's goodwill, and a restriction of one year or less is presumed reasonable. Longer periods can be enforceable but carry more risk. The covenant must be in writing, signed, and supported by consideration, which in a sale is the purchase price itself.
ow do I close an Alabama LLC properly?
The owners approve the dissolution as the operating agreement requires. The company then winds up: collects what it is owed, pays what it owes, cancels contracts and licenses, and distributes what is left. Alabama lets a dissolved company send known creditors a written notice giving at least 120 days to submit claims, which shortens the window for later surprises. The company obtains a Certificate of Compliance from the Alabama Department of Revenue, files Articles of Dissolution with the Secretary of State for a $100 fee, files final tax returns, and keeps its records for the years that follow.
What happens if I just stop operating and never formally dissolve?
The company keeps existing on paper. It remains subject to the Business Privilege Tax until it is legally dissolved, its registered agent obligations continue, and its contracts and liabilities stay open with no procedure for cutting them off. Owners also lose the protection of a proper wind-up if a claim surfaces later. Formal dissolution costs little and closes the door; walking away leaves it open.
The broker gave us a form contract. Do we still need an attorney?
A broker's form is a starting point written to get a deal to closing, not to protect either side if the deal goes wrong afterward. An attorney's job is the part the form leaves generic: what the seller is promising about the business, what happens if those promises turn out to be wrong, how the price is paid and secured, what the buyer is and is not taking on, and the Alabama-specific steps that keep a buyer from inheriting the seller's problems. Review before signing, not after.
Get the deal, or the ending, right
Call (205) 201-1297
or schedule a consultation. Tell us what the business does, who owns it, and where you want it to be in five years. We will tell you which entity fits and what it takes to set it up.
No representation is made that the quality of legal services to be performed is greater than the quality of legal services performed by other lawyers.
Carden Legal Services, LLC serves clients in the following Alabama locations: Birmingham, Alabaster, Helena, Pelham, Jefferson County, Shelby County, Chilton County, Montgomery, Prattville, Millbrook, Wetumpka, Tuskegee, Selma, Troy, Greenville, Autauga County, Montgomery County, Elmore County, Tri-County Region, River Region, Central Alabama, Alabama statewide.