Legal Question in Banking Law in Nevada

I am looking buy a business in Nevada. Should I start my LLC before I make a purchase agreement.? If If I start the LLC before actually buying the business, what address do I use for the business? This will be a single member LLC. Is there really an advantage to using an attorney for the LLC as opposed to LegalZoom?

Asked on 2/04/11, 10:56 pm

1 Answer from Attorneys

Paras Barnett Law Offices of Paras B Barnett, PLLC

I would recommend that you have your LLC formed in Nevada prior to entering into negotiations with the seller. It shows you are intent on completing the transaction and also if you do not close on the purchase you can always use the LLC for your future ventures.

Regarding the address, you could use your current business address (if you receive mail there) or you could use your home address until for the LLC office location until you complete the purchase. (Note, you may need to verify that you can have a home office under your HOA rules and local business licensing regulations.) Note however, if you live outside of Nevada or your other business office is outside of Nevada you will need a resident agent in Nevada to comply with Nevada law.

Regardless of whether the entity is a single member or multiple member LLC, I cannot recommend any fill in the blank type of a form from LegalZoom or any other do-it yourself form database. I have had many issues arise from client's cutting corners and using an online form. Specifically using a form that is not tailored to your business' goals, needs and plan may end up costing you more to fix later. Issues can arise with your LLC formation, operating agreement or other corporate documents if you will be using the LLC to obtain financing for the company purchase or as operating capital. Using an attorney that has a business law practice and who routinely advises companies is highly recommended and will benefit you in both the formation of the LLC and in the acquisition of an existing company.

Finally, given your business objective is to acquire an ongoing business in Nevada, I would also recommend you consult with a business attorney about the purchase and sale agreement for the business. There are numerous legal and operational pit-falls that may not be obvious in a business acquisition. If you do not adequately address those pit-falls in the purchase agreement you could place yourself in a very bad situation regarding the companies liabilities and potentially those of the prior owner. The good news is a properly formed LLC and thoughtfully prepared business purchase and sale agreement can make your acquisition go much more smoothly and give you peace of mind after you close the transaction that you have planned for the success of your business.

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Answered on 2/16/11, 11:34 am

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