Buying a business involves a lot of paperwork and red tape – what can sometimes seem like mountains of the stuff.
When mired in this sea of required documentation and applications, there can be times when you are tempted to skip a few steps and just bet on not getting caught.
This is a HUGE mistake, for a number of reasons.
Reason one? It could be considered fraud.
If you are filling out those mountains of applications for financing, fudging the paperwork could ultimately land you in very hot water. Lying about anything, even something small, will almost assuredly come up when the lending institution (be it a bank or the Small Business Administration) goes over everything with a fine tooth comb before they write you a check. It would be very bad for their own business if they were in the habit of overlooking items that would otherwise prevent a loan from happening. Cover yourself from fraud charges or denial of funding down the line and be absolutely honest.
Reason two? It could mean your licenses get revoked.
If you are buying a business that requires some type of licencing, like most do, your applications for those licenses will seem never-ending. Skipping necessary steps, fudging a bit in your answers, procrastinating and missing deadlines or just not applying for the license at all will likely mean you have to close the business doors when you get caught. Licencing agencies get paid to ensure everyone is following the rules, and they have the right to revoke your licenses and close your business if they catch you trying to bend or break those rules. Do yourself and your investment a favor and don’t skimp on your licencing requirements.
Reason three? Fines, fines, fines.
Even if you manage to escape fraud charges or license revocations, if you get caught or miss an important deadline you will absolutely be slapped with what can quickly add up to debilitating fines. Again, the bankers and agencies you are dealing with have punishments like fines in place to ensure everyone follows the rules. Don’t spend exorbitant amounts of money unnecessarily. Do the paperwork right the first time.
We aren’t trying to scare you, we are trying to give you an honest look at what can happen when you think you can bend or break the rules.
The paperwork might seem never-ending, but it’s very manageable if you stay on top of it – and every operating business out there got it done.
There is also help available if you feel overwhelmed. Ask your business broker for help, or you can hire someone who specializes in licenses for businesses. The message here is do it right so you won’t get caught.
Do you have questions about the licensing requirements for the types of businesses you are interested in? Would you like to know more about the services available to help you? Ask us! Please leave questions or comments here and we would be happy to help.
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