| Debts and unpaid bills on a small business / bar in Spain - Buyers beware you may be liable! |
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| Spain Business Guide Debts on a business in Spain Business Transfer Agent Benidorm & Costa Blanca Spain FREE advice for everyone |
You may be liable for some outstanding debts on a business being purchased.
Believe nothing without written evidence.
Here is a list of the most common debts which you would have to pay if you get stitched up
bar if they tell you a business is debt free - change your agent! )
You will need to see documented evidence that all these are paid up to date.
Employed staff - Social security contributions & income tax liabilities. This will be
available from the sellers Gestoria and should be checked by your Gestoria or Lawyer.
I.V.A retention on rent (This is the V.A.T which is paid by the tenant and is retained from
rental payments - it is not the landlord who is liable for this) Ask your Gestoria or Lawyer
to check this is up to date.
Electricity - Get a copy of the last bill paid this will state that the balance has been paid to
date.
Water/Sewage - Same here get a copy of the last bill paid showing the balance.
Telephone - You guessed it get a copy of the last bill paid.
Rubbish - Get the last bill paid or check with the local council to ensure this is not
outstanding. This is often overlooked and can be some years overdue.
Equipment on rental agreements - These might include items such as pool tables in
bars. Check with suppliers that these are fully paid to date and get documented evidence.
It has been seen to happen where equipment is removed due to unpaid rents and this
would not be good if you are buying a bar based on good pool table sales!
Suppliers - Ask to see all delivery receipts have been paid and check with suppliers. It is
not uncommon for the last bill to be up to date with previous ones being paid off as a
favour. The last thing you need is to have your supply cut off although you would not be
liable unless you are buying a company then you would buy these debts too.
Performing Rights - This is the monthly cost for being allowed to play music in your
venue. Generally you will only be liable for payments from when you take over a business
unless you are buying a limited company, but do check it is up to date.
Repairs & refurbishment - Ask about any areas of the premises which have recently
undergone any repairs or refurbishment such as enclosing of a terrace or new electrical
work for example. Ask to see receipts and check with your Gestoria that the correct
certificates are in place and that work complies with local planning regulations. Very few
English electricians in Spain are legal or registered with the local authority to carry out
such work. Although it may be perfectly safe and correctly installed if they are not
authorised it will not be passed and you may have to pay again for repeat repair works.
Snoop around and ask questions - Thoroughly check all items that are included with the
sale. Verify that these are owned by the seller or do they form part of any inventory
belonging to the landlord. Often especially with small bars everything may be owned by
the landlord such as furniture and kitchen equipment and you will need to know what you
are liable to replace and also what you may dispose of. In some rental contracts you may
be required to replace all equipment for new at the end of a term! Ask your lawyer.
Final reminder - Never take anything you are told to be true always get documented
evidence for everything. Especially debts on utilities as YOU will have to pay them!
Next page - Utilities Services Water etc..
Believe nothing without written evidence.
Here is a list of the most common debts which you would have to pay if you get stitched up
bar if they tell you a business is debt free - change your agent! )
You will need to see documented evidence that all these are paid up to date.
Employed staff - Social security contributions & income tax liabilities. This will be
available from the sellers Gestoria and should be checked by your Gestoria or Lawyer.
I.V.A retention on rent (This is the V.A.T which is paid by the tenant and is retained from
rental payments - it is not the landlord who is liable for this) Ask your Gestoria or Lawyer
to check this is up to date.
Electricity - Get a copy of the last bill paid this will state that the balance has been paid to
date.
Water/Sewage - Same here get a copy of the last bill paid showing the balance.
Telephone - You guessed it get a copy of the last bill paid.
Rubbish - Get the last bill paid or check with the local council to ensure this is not
outstanding. This is often overlooked and can be some years overdue.
Equipment on rental agreements - These might include items such as pool tables in
bars. Check with suppliers that these are fully paid to date and get documented evidence.
It has been seen to happen where equipment is removed due to unpaid rents and this
would not be good if you are buying a bar based on good pool table sales!
Suppliers - Ask to see all delivery receipts have been paid and check with suppliers. It is
not uncommon for the last bill to be up to date with previous ones being paid off as a
favour. The last thing you need is to have your supply cut off although you would not be
liable unless you are buying a company then you would buy these debts too.
Performing Rights - This is the monthly cost for being allowed to play music in your
venue. Generally you will only be liable for payments from when you take over a business
unless you are buying a limited company, but do check it is up to date.
Repairs & refurbishment - Ask about any areas of the premises which have recently
undergone any repairs or refurbishment such as enclosing of a terrace or new electrical
work for example. Ask to see receipts and check with your Gestoria that the correct
certificates are in place and that work complies with local planning regulations. Very few
English electricians in Spain are legal or registered with the local authority to carry out
such work. Although it may be perfectly safe and correctly installed if they are not
authorised it will not be passed and you may have to pay again for repeat repair works.
Snoop around and ask questions - Thoroughly check all items that are included with the
sale. Verify that these are owned by the seller or do they form part of any inventory
belonging to the landlord. Often especially with small bars everything may be owned by
the landlord such as furniture and kitchen equipment and you will need to know what you
are liable to replace and also what you may dispose of. In some rental contracts you may
be required to replace all equipment for new at the end of a term! Ask your lawyer.
Final reminder - Never take anything you are told to be true always get documented
evidence for everything. Especially debts on utilities as YOU will have to pay them!
Next page - Utilities Services Water etc..
