Buying a small business, step by step

12 min read · Updated

Buying a small business follows a sequence: decide what you want, find it, make an offer, check everything, close, take over. The order matters because each step is the cheapest place to learn something — and how you pay changes several of the steps. Pick your path first and the page shows only the steps that apply to you.

How are you paying for it?

Choose one to see only the steps that apply to you. You can switch at any time.

Before you look

Two things decide which listings are worth your time: what you want to own, and what you can actually pay for it.

  1. Write down what you want to own

    When
    Before your first search

    Industry, location, price range, and how involved you want to be day to day. It becomes the filter every later decision runs through, so bound it honestly — a range wide enough to include everything filters nothing.

  2. SBA loan only

    Talk to an SBA lender

    When
    Before you make an offer
    Who decides
    An SBA lender

    To get a 7(a) loan, the business has to be an operating, for-profit business located in the U.S., small under SBA size standards, and not a type of business the SBA excludes.

    From SBA — 7(a) loans, read

    Every owner of the borrower, and every guarantor the SBA requires, must be a U.S. citizen or U.S. national whose principal residence is in the United States.

    From SBA — SOP 50 10 8.1, Lender and Development Company Loan Programs (effective Oct 1, 2026), read

    Ask each lender what it would lend against this kind of business, and on which earnings figure. That number should shape your offer rather than surprise you after it.

    Next guide: Financing a purchase with an SBA 7(a) loan

  3. Cash or seller financing only

    Decide how much you pay now, and how much the seller carries

    When
    Before you make an offer
    Who decides
    You and the seller

    A seller note is a loan from the seller for part of the price, repaid out of the business. Its terms are negotiated like any other part of the deal: the rate, how long it runs, what secures it, and what happens if the business does worse than the seller said.

    A seller willing to carry part of the price is also telling you something about how much they believe their own numbers. A seller who wants everything in cash at closing is worth asking why.

  4. Online business only

    List what you're actually buying

    When
    Before you make an offer

    An online business is a bundle of assets that each move differently: the domain, the site's code and content, the hosting, the payment processor, the ad and marketplace accounts, supplier relationships, inventory, and the email list. Write the list down before you price it — a business whose revenue depends on an account that can't be transferred is worth less than one whose revenue doesn't.

Finding and screening

  1. Screen listings fast, and say no often

    When
    Once your criteria are written down

    Most listings get one look. At this stage you're checking whether the price, the earnings and the business fit what you wrote down — not whether it's a good business yet. A listing's earnings figure is the seller's claim until you've seen the tax returns.

  2. Sign the NDA and get the real numbers

    When
    After first contact
    Who decides
    The seller or their broker

    The confidential detail — the business's name, the full financials, the tax returns — usually arrives after you sign a non-disclosure agreement. Ask for the documents early: a seller who is slow to share them now will be slower later. Which documents to request from a seller has the list.

  3. Online business only

    Get access to the data, not screenshots

    When
    After the NDA
    Who decides
    The seller

    Ask for read access to the analytics, the payment processor and the store or ad accounts, rather than exported reports. Screenshots and spreadsheets can be edited; a dashboard you're logged in to is much harder to fake. Compare the revenue in the payment processor with the revenue in the seller's P&L, month by month.

Making an offer

  1. Make a written offer: the letter of intent

    When
    Once the numbers look right
    Who decides
    You and the seller

    The letter of intent sets the price, the structure and the terms before anyone pays for lawyers. Most of it is non-binding, but the exclusivity, confidentiality and expense clauses usually aren't. The letter of intent: what it does, and what binds you goes through each clause.

  2. SBA loan only

    Agree how long the seller stays

    When
    In the letter of intent
    Who decides
    You, the seller and the lender

    When you buy the whole business with an SBA loan, the seller can't stay on as an officer, director, owner or employee. They can work for the business as a consultant during the handover, for no more than 24 months in total, including any extensions.

    From SBA — SOP 50 10 8.1, Lender and Development Company Loan Programs (effective Oct 1, 2026), read

Due diligence

  1. Check the numbers against the tax returns

    When
    During the exclusivity period
    Who decides
    You and your accountant

    Rebuild the earnings from the business's tax returns, then reconcile the P&L to them and to the bank deposits. The gap between what the seller says the business earns and what the documents support is the part of the asking price you'd be paying for nothing.

    The seller can get the business's tax transcripts from their IRS business tax account, by mail with Form 4506-T, or by calling the IRS business and specialty tax line.

    From IRS — Get a business tax transcript, read

    Next guide: Due diligence, step by step

  2. SBA loan only

    Expect the lender's valuation

    When
    During diligence
    Who decides
    The SBA lender

    If the purchase price is $350,000 or less, the lender may value the business itself, unless buyer and seller are closely related. Above that, the SBA's rules call for an independent business valuation. At a purchase price of $3 million or more, the lender also needs a Quality of Earnings report.

    From SBA — SOP 50 10 8.1, Lender and Development Company Loan Programs (effective Oct 1, 2026), read

  3. Online business only

    Plan the domain move

    When
    Before closing
    Who decides
    The domain registrar

    After a change of registrant, the registrar must lock the domain against transfer to another registrar for 60 days — unless the registrant opted out before the change was requested.

    From ICANN — Transfer Policy, read

    Decide with the seller whether you'll keep the domain at its current registrar for now, so the lock doesn't fall in the middle of your handover.

Closing

  1. Sign the purchase agreement and close

    When
    When diligence is done and the money is ready
    Who decides
    Your attorney

    The purchase agreement turns the letter of intent into binding obligations, with the detail the letter left out: what exactly is being sold, what the seller promises about it, and what happens if those promises turn out to be wrong.

    When the purchase is of a group of assets that make up a business, buyer and seller generally both file Form 8594 with their income tax returns, reporting how the price is allocated.

    From IRS — Instructions for Form 8594, Asset Acquisition Statement, read

    You'll need any licenses and permits the business requires — from the current owner, or by applying for them yourself.

    From SBA — Plan your business: buy an existing business or franchise, read

    Next guide: Closing, and your first months as owner

Your first months as owner

  1. Take over the people, the customers and the cash

    When
    From the day you close
    Who decides
    You

    Meet the employees before you change anything. Call the largest customers and suppliers yourself. Watch cash weekly — the first months are when a buyer finds out which of the seller's habits kept the business running.

    When you acquire a business, you can treat its employees as new hires and complete new Forms I-9, or as continuing in employment and keep the previous owner's forms — in which case you take on responsibility for any errors in them.

    From USCIS — I-9 Central: Mergers and acquisitions, read

This guide is general information about buying a business in the U.S., not legal, tax or financial advice. Rules change: each one above links to the official page it came from and the date we read it, so check the page before you act on it.