Q: Buying an LLC - how do I protect myself from lawsuits for issues prior to the purchase? Am I liable for unfilled taxes?
Lawyers, want to be a Justia Connect Pro too? Learn more ›
- (916) 704-3009
- View Profile
- Answered
A:
When buying an LLC, it's important to conduct thorough due diligence to uncover any potential liabilities, including lawsuits and unpaid taxes. Start by reviewing the company's financial records, contracts, and any ongoing or past litigation. It's wise to hire a legal professional to assist in this process.
To protect yourself, consider negotiating for a "hold harmless" clause in the purchase agreement. This clause ensures that the seller remains responsible for any legal issues that arose before the purchase. Additionally, you might want to explore purchasing liability insurance that covers pre-existing issues.
Regarding taxes, confirm that all taxes have been paid up to the date of purchase. If there are unpaid taxes, the purchase agreement should specify that the seller is responsible for settling these. Getting a tax clearance certificate from the state can also help verify that there are no outstanding tax obligations. Taking these steps can help safeguard you from future legal and financial troubles.
Justia Ask a Lawyer is a forum for consumers to get answers to basic legal questions. Any information sent through Justia Ask a Lawyer is not secure and is done so on a non-confidential basis only.
The use of this website to ask questions or receive answers does not create an attorney–client relationship between you and Justia, or between you and any attorney who receives your information or responds to your questions, nor is it intended to create such a relationship. Additionally, no responses on this forum constitute legal advice, which must be tailored to the specific circumstances of each case. You should not act upon information provided in Justia Ask a Lawyer without seeking professional counsel from an attorney admitted or authorized to practice in your jurisdiction. Justia assumes no responsibility to any person who relies on information contained on or received through this site and disclaims all liability in respect to such information.
Justia cannot guarantee that the information on this website (including any legal information provided by an attorney through this service) is accurate, complete, or up-to-date. While we intend to make every attempt to keep the information on this site current, the owners of and contributors to this site make no claims, promises or guarantees about the accuracy, completeness or adequacy of the information contained in or linked to from this site.
