Are We Obligated to Take On Credit Card Processing Contract?

[undersea]

While we're on the subject - if they sold any gift certificates, make sure you get the face value of those at the closing! We had 4-5 turn up after the fact that the PO's refused to pay us for.
We ended up eating the cost of the room just to keep the goodwill of the guest..

While we're on the subject - if they sold any gift certificates, make sure you get the face value of those at the closing! We had 4-5 turn up after the fact that the PO's refused to pay us for.
We ended up eating the cost of the room just to keep the goodwill of the guest.

!!
Especially ones they donated. If they say they didn't keep track of them, then they can be billed for every one that is redeemed. When you buy a failing B&B or old school B&B they don't keep track of things properly. You walk in and they walk out... I know HF had great advise about all of this, but moving from your place and loose ends to the new place there is simply a gazillion things to keep track of.
So make a list, check it off one by one.
.

We make our charity certificates with a very short redemption time (since they have no actually cash value they don't seem to come under the required 5 year law). When we sell the innkeepers are going to have to honor about them (few in number).... or they can refuse the charity ones if they like and live with the consequences of refusing to "give it away." There is no way to put a face value on those.
They will receive a cash credit for the face value of any outstanding actual purchased certificates.
IF they belong to people we know well (most we don't) we may actually contact those holders and remind them to use them "soon."
.

Cannot remember the exact wording, but read that never word a charitable or incentive or giveaway as "gift certificate" - which require long or never-expire dates. I believe they said to call it a "voucher", but not sure if that has the same problem

 

[Breakfast Diva]

While we're on the subject - if they sold any gift certificates, make sure you get the face value of those at the closing! We had 4-5 turn up after the fact that the PO's refused to pay us for.
We ended up eating the cost of the room just to keep the goodwill of the guest..

While we're on the subject - if they sold any gift certificates, make sure you get the face value of those at the closing! We had 4-5 turn up after the fact that the PO's refused to pay us for.
We ended up eating the cost of the room just to keep the goodwill of the guest.

!!
Especially ones they donated. If they say they didn't keep track of them, then they can be billed for every one that is redeemed. When you buy a failing B&B or old school B&B they don't keep track of things properly. You walk in and they walk out... I know HF had great advise about all of this, but moving from your place and loose ends to the new place there is simply a gazillion things to keep track of.
So make a list, check it off one by one.
.

We make our charity certificates with a very short redemption time (since they have no actually cash value they don't seem to come under the required 5 year law). When we sell the innkeepers are going to have to honor about them (few in number).... or they can refuse the charity ones if they like and live with the consequences of refusing to "give it away." There is no way to put a face value on those.
They will receive a cash credit for the face value of any outstanding actual purchased certificates.
IF they belong to people we know well (most we don't) we may actually contact those holders and remind them to use them "soon."
.

We make our charity certificates with a very short redemption time (since they have no actually cash value they don't seem to come under the required 5 year law). When we sell the innkeepers are going to have to honor about them (few in number).... or they can refuse the charity ones if they like and live with the consequences of refusing to "give it away." There is no way to put a face value on those.
They will receive a cash credit for the face value of any outstanding actual purchased certificates.
IF they belong to people we know well (most we don't) we may actually contact those holders and remind them to use them "soon."

Why would the new owners have to honor the donation certificates? Those are your own donations and you should be responsible for them. The new owners should never have to host someone for free if it wasn't their choice. You would still need to put a dollar figure on them and deduct it in escrow. If you put a short expiration period on them you know they are out there and if you are for sale, stop giving them.

 

[gillumhouse]

While we're on the subject - if they sold any gift certificates, make sure you get the face value of those at the closing! We had 4-5 turn up after the fact that the PO's refused to pay us for.
We ended up eating the cost of the room just to keep the goodwill of the guest..

While we're on the subject - if they sold any gift certificates, make sure you get the face value of those at the closing! We had 4-5 turn up after the fact that the PO's refused to pay us for.
We ended up eating the cost of the room just to keep the goodwill of the guest.

!!
Especially ones they donated. If they say they didn't keep track of them, then they can be billed for every one that is redeemed. When you buy a failing B&B or old school B&B they don't keep track of things properly. You walk in and they walk out... I know HF had great advise about all of this, but moving from your place and loose ends to the new place there is simply a gazillion things to keep track of.
So make a list, check it off one by one.
.

We make our charity certificates with a very short redemption time (since they have no actually cash value they don't seem to come under the required 5 year law). When we sell the innkeepers are going to have to honor about them (few in number).... or they can refuse the charity ones if they like and live with the consequences of refusing to "give it away." There is no way to put a face value on those.
They will receive a cash credit for the face value of any outstanding actual purchased certificates.
IF they belong to people we know well (most we don't) we may actually contact those holders and remind them to use them "soon."
.

Freebies have no cash value. One can only deduct actual expenses, not the rate for he room as some think. That is why I now donate only roasts of coffee and a mug to go with it. I have also been adding a coffee grinder to the mix to sweeten the pot for silent auctions. And donated certificates are redeemed by me or not at all. I rarely give more than 6 months (if that) to redeem one that they get to choose the countries.

 

[undersea]

While we're on the subject - if they sold any gift certificates, make sure you get the face value of those at the closing! We had 4-5 turn up after the fact that the PO's refused to pay us for.
We ended up eating the cost of the room just to keep the goodwill of the guest..

While we're on the subject - if they sold any gift certificates, make sure you get the face value of those at the closing! We had 4-5 turn up after the fact that the PO's refused to pay us for.
We ended up eating the cost of the room just to keep the goodwill of the guest.

!!
Especially ones they donated. If they say they didn't keep track of them, then they can be billed for every one that is redeemed. When you buy a failing B&B or old school B&B they don't keep track of things properly. You walk in and they walk out... I know HF had great advise about all of this, but moving from your place and loose ends to the new place there is simply a gazillion things to keep track of.
So make a list, check it off one by one.
.

We make our charity certificates with a very short redemption time (since they have no actually cash value they don't seem to come under the required 5 year law). When we sell the innkeepers are going to have to honor about them (few in number).... or they can refuse the charity ones if they like and live with the consequences of refusing to "give it away." There is no way to put a face value on those.
They will receive a cash credit for the face value of any outstanding actual purchased certificates.
IF they belong to people we know well (most we don't) we may actually contact those holders and remind them to use them "soon."
.

We make our charity certificates with a very short redemption time (since they have no actually cash value they don't seem to come under the required 5 year law). When we sell the innkeepers are going to have to honor about them (few in number).... or they can refuse the charity ones if they like and live with the consequences of refusing to "give it away." There is no way to put a face value on those.
They will receive a cash credit for the face value of any outstanding actual purchased certificates.
IF they belong to people we know well (most we don't) we may actually contact those holders and remind them to use them "soon."

Why would the new owners have to honor the donation certificates? Those are your own donations and you should be responsible for them. The new owners should never have to host someone for free if it wasn't their choice. You would still need to put a dollar figure on them and deduct it in escrow. If you put a short expiration period on them you know they are out there and if you are for sale, stop giving them.
.

Exactly.
We were considering buying a nice say spa a couple years ago. Turns out there was a ton of gift certificates and very discounted coupons - like $20,000 worth of obligations. Did not bite.
If you are buying the ASSETS of a business, the obligations belong to the prior owner. If you are accepting the obligations, the price should be negotiated, as these are just one more expense being passed along.
Of course, if you choose not to honor them, there is a pile of potential negative reviews, fair or not...

 

[Tom]

While we're on the subject - if they sold any gift certificates, make sure you get the face value of those at the closing! We had 4-5 turn up after the fact that the PO's refused to pay us for.
We ended up eating the cost of the room just to keep the goodwill of the guest..

While we're on the subject - if they sold any gift certificates, make sure you get the face value of those at the closing! We had 4-5 turn up after the fact that the PO's refused to pay us for.
We ended up eating the cost of the room just to keep the goodwill of the guest.

!!
Especially ones they donated. If they say they didn't keep track of them, then they can be billed for every one that is redeemed. When you buy a failing B&B or old school B&B they don't keep track of things properly. You walk in and they walk out... I know HF had great advise about all of this, but moving from your place and loose ends to the new place there is simply a gazillion things to keep track of.
So make a list, check it off one by one.
.

We make our charity certificates with a very short redemption time (since they have no actually cash value they don't seem to come under the required 5 year law). When we sell the innkeepers are going to have to honor about them (few in number).... or they can refuse the charity ones if they like and live with the consequences of refusing to "give it away." There is no way to put a face value on those.
They will receive a cash credit for the face value of any outstanding actual purchased certificates.
IF they belong to people we know well (most we don't) we may actually contact those holders and remind them to use them "soon."
.

We make our charity certificates with a very short redemption time (since they have no actually cash value they don't seem to come under the required 5 year law). When we sell the innkeepers are going to have to honor about them (few in number).... or they can refuse the charity ones if they like and live with the consequences of refusing to "give it away." There is no way to put a face value on those.
They will receive a cash credit for the face value of any outstanding actual purchased certificates.
IF they belong to people we know well (most we don't) we may actually contact those holders and remind them to use them "soon."

Why would the new owners have to honor the donation certificates? Those are your own donations and you should be responsible for them. The new owners should never have to host someone for free if it wasn't their choice. You would still need to put a dollar figure on them and deduct it in escrow. If you put a short expiration period on them you know they are out there and if you are for sale, stop giving them.
.

Exactly.
We were considering buying a nice say spa a couple years ago. Turns out there was a ton of gift certificates and very discounted coupons - like $20,000 worth of obligations. Did not bite.
If you are buying the ASSETS of a business, the obligations belong to the prior owner. If you are accepting the obligations, the price should be negotiated, as these are just one more expense being passed along.
Of course, if you choose not to honor them, there is a pile of potential negative reviews, fair or not...
.

"very discounted coupons" Groupon or the like ?

 

[undersea]

While we're on the subject - if they sold any gift certificates, make sure you get the face value of those at the closing! We had 4-5 turn up after the fact that the PO's refused to pay us for.
We ended up eating the cost of the room just to keep the goodwill of the guest..

While we're on the subject - if they sold any gift certificates, make sure you get the face value of those at the closing! We had 4-5 turn up after the fact that the PO's refused to pay us for.
We ended up eating the cost of the room just to keep the goodwill of the guest.

!!
Especially ones they donated. If they say they didn't keep track of them, then they can be billed for every one that is redeemed. When you buy a failing B&B or old school B&B they don't keep track of things properly. You walk in and they walk out... I know HF had great advise about all of this, but moving from your place and loose ends to the new place there is simply a gazillion things to keep track of.
So make a list, check it off one by one.
.

We make our charity certificates with a very short redemption time (since they have no actually cash value they don't seem to come under the required 5 year law). When we sell the innkeepers are going to have to honor about them (few in number).... or they can refuse the charity ones if they like and live with the consequences of refusing to "give it away." There is no way to put a face value on those.
They will receive a cash credit for the face value of any outstanding actual purchased certificates.
IF they belong to people we know well (most we don't) we may actually contact those holders and remind them to use them "soon."
.

We make our charity certificates with a very short redemption time (since they have no actually cash value they don't seem to come under the required 5 year law). When we sell the innkeepers are going to have to honor about them (few in number).... or they can refuse the charity ones if they like and live with the consequences of refusing to "give it away." There is no way to put a face value on those.
They will receive a cash credit for the face value of any outstanding actual purchased certificates.
IF they belong to people we know well (most we don't) we may actually contact those holders and remind them to use them "soon."

Why would the new owners have to honor the donation certificates? Those are your own donations and you should be responsible for them. The new owners should never have to host someone for free if it wasn't their choice. You would still need to put a dollar figure on them and deduct it in escrow. If you put a short expiration period on them you know they are out there and if you are for sale, stop giving them.
.

Exactly.
We were considering buying a nice say spa a couple years ago. Turns out there was a ton of gift certificates and very discounted coupons - like $20,000 worth of obligations. Did not bite.
If you are buying the ASSETS of a business, the obligations belong to the prior owner. If you are accepting the obligations, the price should be negotiated, as these are just one more expense being passed along.
Of course, if you choose not to honor them, there is a pile of potential negative reviews, fair or not...
.

"very discounted coupons" Groupon or the like ?
.

SpaFinder

 

[Garden_Pix_Inn]

While we're on the subject - if they sold any gift certificates, make sure you get the face value of those at the closing! We had 4-5 turn up after the fact that the PO's refused to pay us for.
We ended up eating the cost of the room just to keep the goodwill of the guest..

While we're on the subject - if they sold any gift certificates, make sure you get the face value of those at the closing! We had 4-5 turn up after the fact that the PO's refused to pay us for.
We ended up eating the cost of the room just to keep the goodwill of the guest.

!!
Especially ones they donated. If they say they didn't keep track of them, then they can be billed for every one that is redeemed. When you buy a failing B&B or old school B&B they don't keep track of things properly. You walk in and they walk out... I know HF had great advise about all of this, but moving from your place and loose ends to the new place there is simply a gazillion things to keep track of.
So make a list, check it off one by one.
.

We make our charity certificates with a very short redemption time (since they have no actually cash value they don't seem to come under the required 5 year law). When we sell the innkeepers are going to have to honor about them (few in number).... or they can refuse the charity ones if they like and live with the consequences of refusing to "give it away." There is no way to put a face value on those.
They will receive a cash credit for the face value of any outstanding actual purchased certificates.
IF they belong to people we know well (most we don't) we may actually contact those holders and remind them to use them "soon."
.

We make our charity certificates with a very short redemption time (since they have no actually cash value they don't seem to come under the required 5 year law). When we sell the innkeepers are going to have to honor about them (few in number).... or they can refuse the charity ones if they like and live with the consequences of refusing to "give it away." There is no way to put a face value on those.
They will receive a cash credit for the face value of any outstanding actual purchased certificates.
IF they belong to people we know well (most we don't) we may actually contact those holders and remind them to use them "soon."

Why would the new owners have to honor the donation certificates? Those are your own donations and you should be responsible for them. The new owners should never have to host someone for free if it wasn't their choice. You would still need to put a dollar figure on them and deduct it in escrow. If you put a short expiration period on them you know they are out there and if you are for sale, stop giving them.
.

GIFT CERTIFICATES, HOW THEY TRANSFER TO NEW OWNERS, ETC.
We only give two freebies/year and they are both either used or expire in 6 months or less after issue and are always timed to be off season (so little of value is being given away, no matter WHO is providing it). IF I had a contract to sell I (of course) would not issue any more. The use period is so short it might take that amount of time just to close! Redemption of such charity certificates might be billed to the seller at an agreed rate (most certainly NOT at any rate the buyer picks.
One thing buyers might have to honor--and might not like it--is the 2 for 1 programs inns participate in. Those books with coupons run various year-long dates. You can't easily back out of them in the middle. Here again, they are set up so as to NOT give away something really valuable in high season [mine opt out of Oct. (high) and Fri.Sat. (high period)].
I think one of the biggest hurdles buyers have to face (correct me if I'm wrong) is that whoever the buyer is, they are NOT the seller. People who knew and 'loved' the inn under Owner A often don't like Owner B. Or they don't like the fact Owner B ups the rates to cover his newly-minted mortgage or he changes the inn's focus, theme or niche market.
There will be fall out and loss of some "regulars." Not rolling with the flow on the gift certificate side of it will only make it worse. In our case, the GC's are often bought by people who really like the inn and are given to others they want to like the inn, too. In a sense they are some of the BEST marketers for the inn They have value beyond room nights..
My advice would be to go out of your way to make that group like you (or at least give you a chance). Replacing them will cost you more than finding your own new customers.

 

[Sunshine]

So much helpful info in this thread!! As a seller, and then a buyer 'again' there are some things in here, I never thought about!
Definitely will remember this! We don't want our buyers to ever 'get stuck' with anything here, and like JB, we want them to be happy and successful!
And some of this info, are things I never thought about when it comes to buying a new B&B in the location we are looking (we started this B&B and didn't buy it pre-existing).
Thanks for the helpful info everyone!

 

[Garden_Pix_Inn]

I'll throw in another thing you are responsible for if you didn't get it sorted before closing - unemployment benefits. If you don't change the name of the business (not talking about the name of the corporation that owns the business, the actual ABC B&B name) you're on the hook as far as the state is concerned. If ANYONE collected unemployment bennies under that inn name, at any time in the past, you are responsible for paying all of that money back to the state.
Right. You thought unemployment was a gift. Not a chance. If you made an unemployment claim against a business, the BUSINESS pays that bennie..

Correct. Every obligation of the business accrues to the buyer. When I bought a construction s corp, I had to provide warranty service to his past customers!!! How we learn...
unpaid taxes could theoretically cost you your building
.

Correct. Every obligation of the business accrues to the buyer. When I bought a construction s corp, I had to provide warranty service to his past customers!!! How we learn... unpaid taxes could theoretically cost you your building

The exception is things like the gas/propane bill. We had a duplex where the tenant was about to fly the coop. [I warned the natural gas co. and they ignored me.] When they did go, gas co. tried to shake past due bills out of the new owner when we sold shortly thereafter. Nothing doing! My husband (the attorney) called the utility co. and set them straight. Since they didn't collect it from the tenant (in whose name there was an account) they weren't going to get it. I'm assuming this is also true with the previous owners' bills. Be sure you change power/gas/water bills to YOUR name when you buy.
Also, be SURE you change the phone number over with the consent of the seller and BEFORE it lapses or is turned off. Often, you can't get that number back. With NAP (name/address/phone) so critical to online placement status, you don't want to let go of a long-running (aka valuable) phone number.
If you aren't selling it as a B&B you can sell of the number to another B&B (for a price) and call forwarding will take the potential calls there. That also has to be set up before the number is put back in the "gene pool."

 

[Garden_Pix_Inn]

You should NEVER by their corporation or LLC. Always set up your own.
If you buy their legal entity, you're on the hook for any debts, contracts or obligations their company set up. If you're a new LLC or C-corp, you always get a fresh start - although if they've negotiated some good deals you may have a hard time getting the vendors to give you the same deal.
Get your attorney involved asap. Buy the assets, buy the name (and get it trademarked because that costs very little extra to do), buy the goodwill, buy their customer base and data, but don't every buy their corporate entity..

We are not buying their LLC. We already have an entity and are buying their assets and business.
.

We are not buying their LLC. We already have an entity and are buying their assets and business.

• Make darn sure you buy the web address and all access to it, especially the source of the web address, such as GoDaddy or Network Solutions.
• Make sure you buy the phone number. See my other note on doing so without interuption.

Both are VERY valuable in the online world these days.
Also, try to get them to sign a non-compete agreement. If they really are retiring or moving away it won't matter to them a bit. But, if they are staying in town and/or get lured by AirBnB or something, you'll be glad you did.

 

[Garden_Pix_Inn]

I am not sure how you are buying this business.
There are normally two ways:
Asset Sale - you buy the property, furnishings, equipment, customer list, etc. Then you file as a new business with a new name and tax ID. In this case, I doubt you are responsible. That is the prior owner's obligation.
Buying the business itself - such as an S corp, LLC, sole proprietorship, etc.. You keep the old business open with the same tax ID and name. In this case, you may be obligated to keep the contract. This is rarely a good way to buy a business, regardless of claims made by the prior owner or their broker or lawyer. I got stung years ago when I bought an S corp, for unpaid tax obligations, unpaid workmen's comp fines and other problems. You also inherit their liabilities, such as if someone who stayed there a year ago and filed a lawsuit..

More words of advise for those buying turn-key (this is what you should be getting for your $$ with your B&B consultant but you won't - so I am offering it for free - please make a note):
TAXES
Another thing that will happen is you will get the tax bill - here it is due in December, and it is for the previous year. So what this means is the PO's are off in France and you have to pay it or else. It was for the year THEY owned and operated, and now it is your business.
You can fight them and tell them we are a diff business now, even if you change the name of the B&B and they will tell you the tax parcel # and you are obligated to pay it.
Legally the former owners are obligated to pay, but try to get them to do so...I am sharing this NOW so you who buy a "turn key" B&B are aware that this is another one that will show up when they are long gone...
MARKETING RENEWALS
Another thing that happened to us is that the prev owners let all marketing lapse, that should be requirement in the contract that all are paid and up to date. What this meant was we walked in and had a stack of renewals a mile high and had to fork out a ton of CASH to pay for them all to keep the business running. Cash we didn't have. Most of us use fewer B&B directories and such now.
OPERATING EXPENSES
Make sure you have some operating expense $ as there will be surprises.
The president of our B&B association is on this forum, and in fact that is how we met. I spoke to her and said "We have no business, no revenue stream it is winter and the state assoc renewal is due Jan 1 (which many of them are) and they did not accept Visa. Is there a payment plan? What can we do?
We were up a creek. We had tax payments, and a hefty amount of annual renewals due Jan 1. DH went out and got a job...and has worked ever since.
FALSIFYING REVENUE
The B&B consultant has a disclaimer that they are not responsible for any facts and figures. So on our transaction they had a CASH line on their revenue stream excel paperwork. This was a lie. A bold faced lie. Ex: so far this year we have had not one cash payment here from guests. So all that to say don't trust the former innkeepers as far as you can throw them.
I am not the only one, there are 3 or 4 here who had encountered the same thing. Some want out, bad, and are willing to do anything to sell their place. I want to let you know this. I am honest, 100% of the time, and want the buyers of this place to have as much information and everything they need to succeed and continue on here. But then that is prob why we are still for sale! ha If I fudged the numbers... How did they fudge them you ask? They ran it as an S Corp and included other business transactions in their tax return. It was not separated out. So the numbers were inflated.
CONVEYANCE
If you don't take photos of each room and porch, grounds, shop, attic, basement, garage, etc they may also take things that you thought conveyed for the business. But on the opposite spectrum they will also leave every drawer full of junk and say it is for the business. So you will move in and have nowhere to put your stuff.
Porch swing - gone. Rugs - gone. Beds - taken and replaced with different beds and dressers. Fine china - switched out. Curtains in two rooms - gone.
Broken down gas grill - left. Broken down lawn mower - left. Tablecloths that don't fit any tables - left. Pieces of this and that and every drawer filled with random things you don't know what they are or what for - left.
Paint colors - not marked down anywhere for touch up. Reservation info from prev guests - index card system, gone.
If I think of any others I will add them later.
.

More words of advise for those buying turn-key (this is what you should be getting for your $
MARKETING RENEWALS
FALSIFYING REVENUE
The B&B consultant has a disclaimer that they are not responsible for any facts and figures. So on our transaction they had a CASH line on their revenue stream excel paperwork.
They ran it as an S Corp and included other business transactions in their tax return. It was not separated out. So the numbers were inflated.
CONVEYANCE
If you don't take photos of each room and porch, grounds, shop, attic, basement, garage, etc they may also take things that you thought conveyed for the business. But on the opposite spectrum they will also leave every drawer full of junk and say it is for the business. So you will move in and have nowhere to put your stuff.

My thoughts:
Marketing Renewals: They should be pro-rated at closing. Ask for a list with pricing and have the attorney figure it out
Falsifying Revnue
Reminds me of a for sale Rome GA B&B (1996) which tried to convince us all their wedding revenue was cash and they could support the huge asking price without any proof. The rule is this: What you report to the sales tax people and what you report to the IRS is the truth and the only truth. If you aren't reporting cash sales then you didn't have any!
I use Resnexus and we put ALL cash into the system (guest by guest). And that includes the biggie--cash for Deneen mugs. We are truthful, too. That revenue does count when you are for sale. Nobody will consider seeking financing based on the promise of cash sales with no proof....
We have provided the key pages of our IRS filing to the business consultant. Yes, we have "another business" (a rental house) but I think that is clearly shown on a different form which is NOT provided to the consultant or the buyer. Recently, we removed the vacation rental used in conjunction with the inn so the numbers are clean. The inn price went down as a result and so did revenue earned (by a little bit since cottage isn't a big part of what we do). Buyers didn't seem interested in something 7 miles away. It can always come back on the table and the info come back, too.
One looker/buyer wanted to know my mortgage payment. THAT is NOHDB. (For one thing, our mortgage is not for 100% of the value of the property; it is an after-the-fact equity loan so the amount has NO bearing on what a new owner would be paying. Mind your own business, missy.)
Conveyance
When we sold our first inn as an office building, they tossed a bunch of stuff in the street/trash. I took some of it with me (books, decor, etc.) We also asked permission to remove a couple of items we KNEW they would have to remove and we had a use for it. ASK.
Artwork:
I have been changing out all my fine art for lesser items PRIOR to finding a buyer. They will then not make the mistake of thinking they are getting the art collection when they are not. Unlike some sellers, I'm not buying junk. The price is not in the hundreds but the taste in the art still has to fit the inn as it stands today. I've found Habitat stores to be a good source!
We have said "turnkey at 98%." That does allow for the 2% which is family antiques which have to be removed. I figure we can also negotiate the other stuff. Even people buying turnkey often have stuff they want to use or could use They SHOULD have something to add. I strongly feel that THEIR art will change the place and it should! I will leave with furniture from one of two foyers. That's about 4 pieces of furniture. It will be stated up front. I'll give in IF they can't live without it, but none of what needs to leave is critical to operating the inn.
Turnkey is a funny thing: If taken strictly, we will leave with our personal 5 bureaus, one bed, 2 office chairs and two lawn chairs (stored in the shed). Realistically, we are likely to leave with some of the office file cabinets because only "old school" people even CARE about file cabinets. The last couple through here kinda laughed, saying "what would we do with those???"
I did ask my consultant about "kitchen items and gadgets." HE said: leave what it takes to make a standard breakfast. ... well, the kitchen will be very empty. We also don't have a fancy Kitchen-aide mixer or Cuisinart food processor so IF they can't cook pancakes or French toast without those (we do it) they'll need to bring their own. Food gadgets are pretty personal stuff so.... it gets packed. Of course we can't pack it yet--we're using it!!! Most of my stuff was wedding gifts 43 years ago. One does have to wonder WHY anyone would want it, LOL!
Most inns can benefit from a linens yard sale. I made about $800 a few years ago selling off slightly stained, tired, etc. linens. I still have a pile but it is much smaller.
By the way, gift shop items and inventory has to be conveyed: 50 Deneen mugs with probably another 100 on the way. Value: $1500 or so. However, IF I sold today (before ordering those 100 for "the season"), yes, they'd get 50 and the option to pick their own colors/shapes. Logo conveys, of course. I would think everyone would let the soap supply and mugs supply run down--you really do not know WHAT the new people will want to do. They might not LIKE the soap or hate the mug shape/colors. I think "most" new owners also change the linens to "their own taste." I'm perfectly willing to take anything they absolutely hate if it is headed to the dump. Like I said: It is possible we'll exit here with a bed, some bureaus, 2 lawn chairs and our mothers' tables which are in storage. My truck full of antique lumber and garden tools will be far larger than my van full of furniture.
Watch out for what I call evil substitutions. I know an owner who bought "oak bureaus" (per the contract).... she got "oak patterned cardboard bureaus."

 

[Garden_Pix_Inn]

I am not sure how you are buying this business.
There are normally two ways:
Asset Sale - you buy the property, furnishings, equipment, customer list, etc. Then you file as a new business with a new name and tax ID. In this case, I doubt you are responsible. That is the prior owner's obligation.
Buying the business itself - such as an S corp, LLC, sole proprietorship, etc.. You keep the old business open with the same tax ID and name. In this case, you may be obligated to keep the contract. This is rarely a good way to buy a business, regardless of claims made by the prior owner or their broker or lawyer. I got stung years ago when I bought an S corp, for unpaid tax obligations, unpaid workmen's comp fines and other problems. You also inherit their liabilities, such as if someone who stayed there a year ago and filed a lawsuit..

More words of advise for those buying turn-key (this is what you should be getting for your $$ with your B&B consultant but you won't - so I am offering it for free - please make a note):
TAXES
Another thing that will happen is you will get the tax bill - here it is due in December, and it is for the previous year. So what this means is the PO's are off in France and you have to pay it or else. It was for the year THEY owned and operated, and now it is your business.
You can fight them and tell them we are a diff business now, even if you change the name of the B&B and they will tell you the tax parcel # and you are obligated to pay it.
Legally the former owners are obligated to pay, but try to get them to do so...I am sharing this NOW so you who buy a "turn key" B&B are aware that this is another one that will show up when they are long gone...
MARKETING RENEWALS
Another thing that happened to us is that the prev owners let all marketing lapse, that should be requirement in the contract that all are paid and up to date. What this meant was we walked in and had a stack of renewals a mile high and had to fork out a ton of CASH to pay for them all to keep the business running. Cash we didn't have. Most of us use fewer B&B directories and such now.
OPERATING EXPENSES
Make sure you have some operating expense $ as there will be surprises.
The president of our B&B association is on this forum, and in fact that is how we met. I spoke to her and said "We have no business, no revenue stream it is winter and the state assoc renewal is due Jan 1 (which many of them are) and they did not accept Visa. Is there a payment plan? What can we do?
We were up a creek. We had tax payments, and a hefty amount of annual renewals due Jan 1. DH went out and got a job...and has worked ever since.
FALSIFYING REVENUE
The B&B consultant has a disclaimer that they are not responsible for any facts and figures. So on our transaction they had a CASH line on their revenue stream excel paperwork. This was a lie. A bold faced lie. Ex: so far this year we have had not one cash payment here from guests. So all that to say don't trust the former innkeepers as far as you can throw them.
I am not the only one, there are 3 or 4 here who had encountered the same thing. Some want out, bad, and are willing to do anything to sell their place. I want to let you know this. I am honest, 100% of the time, and want the buyers of this place to have as much information and everything they need to succeed and continue on here. But then that is prob why we are still for sale! ha If I fudged the numbers... How did they fudge them you ask? They ran it as an S Corp and included other business transactions in their tax return. It was not separated out. So the numbers were inflated.
CONVEYANCE
If you don't take photos of each room and porch, grounds, shop, attic, basement, garage, etc they may also take things that you thought conveyed for the business. But on the opposite spectrum they will also leave every drawer full of junk and say it is for the business. So you will move in and have nowhere to put your stuff.
Porch swing - gone. Rugs - gone. Beds - taken and replaced with different beds and dressers. Fine china - switched out. Curtains in two rooms - gone.
Broken down gas grill - left. Broken down lawn mower - left. Tablecloths that don't fit any tables - left. Pieces of this and that and every drawer filled with random things you don't know what they are or what for - left.
Paint colors - not marked down anywhere for touch up. Reservation info from prev guests - index card system, gone.
If I think of any others I will add them later.
.

The closing of the sale should be handled by an attorney/escrow agent, and the previous owner's portion of the taxes due should be withheld from their proceeds and put in escrow by the closing agent.
The same should be done with utility bills, etc..
Similarly, the buyer should expect to have to pay for any fuel oil or fire wood or other similar commodity that the previous owners have already purchased and is in storage on the property.
Yes, there should be a conveyance list -- assume nothing -- and you need to take inventory immediately upon closing...
.

I also assume this should be done with any existing debts, contracts, etc.
All this type stuff should be enumerated in the agreement, which is done and vetted by your attorney. For this, I would not use anything other than an attorney.
.

I also assume this should be done with any existing debts, contracts, etc.
All this type stuff should be enumerated in the agreement, which is done and vetted by your attorney. For this, I would not use anything other than an attorney.

Right. In a perfect world no Realtor will be involved, only an attorney and the business consultant as "helper" in getting all the info on paper.

 

[Garden_Pix_Inn]

I am not sure how you are buying this business.
There are normally two ways:
Asset Sale - you buy the property, furnishings, equipment, customer list, etc. Then you file as a new business with a new name and tax ID. In this case, I doubt you are responsible. That is the prior owner's obligation.
Buying the business itself - such as an S corp, LLC, sole proprietorship, etc.. You keep the old business open with the same tax ID and name. In this case, you may be obligated to keep the contract. This is rarely a good way to buy a business, regardless of claims made by the prior owner or their broker or lawyer. I got stung years ago when I bought an S corp, for unpaid tax obligations, unpaid workmen's comp fines and other problems. You also inherit their liabilities, such as if someone who stayed there a year ago and filed a lawsuit..

More words of advise for those buying turn-key (this is what you should be getting for your $$ with your B&B consultant but you won't - so I am offering it for free - please make a note):
TAXES
Another thing that will happen is you will get the tax bill - here it is due in December, and it is for the previous year. So what this means is the PO's are off in France and you have to pay it or else. It was for the year THEY owned and operated, and now it is your business.
You can fight them and tell them we are a diff business now, even if you change the name of the B&B and they will tell you the tax parcel # and you are obligated to pay it.
Legally the former owners are obligated to pay, but try to get them to do so...I am sharing this NOW so you who buy a "turn key" B&B are aware that this is another one that will show up when they are long gone...
MARKETING RENEWALS
Another thing that happened to us is that the prev owners let all marketing lapse, that should be requirement in the contract that all are paid and up to date. What this meant was we walked in and had a stack of renewals a mile high and had to fork out a ton of CASH to pay for them all to keep the business running. Cash we didn't have. Most of us use fewer B&B directories and such now.
OPERATING EXPENSES
Make sure you have some operating expense $ as there will be surprises.
The president of our B&B association is on this forum, and in fact that is how we met. I spoke to her and said "We have no business, no revenue stream it is winter and the state assoc renewal is due Jan 1 (which many of them are) and they did not accept Visa. Is there a payment plan? What can we do?
We were up a creek. We had tax payments, and a hefty amount of annual renewals due Jan 1. DH went out and got a job...and has worked ever since.
FALSIFYING REVENUE
The B&B consultant has a disclaimer that they are not responsible for any facts and figures. So on our transaction they had a CASH line on their revenue stream excel paperwork. This was a lie. A bold faced lie. Ex: so far this year we have had not one cash payment here from guests. So all that to say don't trust the former innkeepers as far as you can throw them.
I am not the only one, there are 3 or 4 here who had encountered the same thing. Some want out, bad, and are willing to do anything to sell their place. I want to let you know this. I am honest, 100% of the time, and want the buyers of this place to have as much information and everything they need to succeed and continue on here. But then that is prob why we are still for sale! ha If I fudged the numbers... How did they fudge them you ask? They ran it as an S Corp and included other business transactions in their tax return. It was not separated out. So the numbers were inflated.
CONVEYANCE
If you don't take photos of each room and porch, grounds, shop, attic, basement, garage, etc they may also take things that you thought conveyed for the business. But on the opposite spectrum they will also leave every drawer full of junk and say it is for the business. So you will move in and have nowhere to put your stuff.
Porch swing - gone. Rugs - gone. Beds - taken and replaced with different beds and dressers. Fine china - switched out. Curtains in two rooms - gone.
Broken down gas grill - left. Broken down lawn mower - left. Tablecloths that don't fit any tables - left. Pieces of this and that and every drawer filled with random things you don't know what they are or what for - left.
Paint colors - not marked down anywhere for touch up. Reservation info from prev guests - index card system, gone.
If I think of any others I will add them later.
.

The closing of the sale should be handled by an attorney/escrow agent, and the previous owner's portion of the taxes due should be withheld from their proceeds and put in escrow by the closing agent.
The same should be done with utility bills, etc..
Similarly, the buyer should expect to have to pay for any fuel oil or fire wood or other similar commodity that the previous owners have already purchased and is in storage on the property.
Yes, there should be a conveyance list -- assume nothing -- and you need to take inventory immediately upon closing...
.

Yes, there should be a conveyance list -- assume nothing -- and you need to take inventory immediately upon closing...

Actually, you need a walk through just prior to closing, just like with a house. AFTER you close it is too late! You bought it.

 

[Tom]

While we're on the subject - if they sold any gift certificates, make sure you get the face value of those at the closing! We had 4-5 turn up after the fact that the PO's refused to pay us for.
We ended up eating the cost of the room just to keep the goodwill of the guest..

I sold a (non-B&B) business recently and asset evaluation included accounts receivable. Although our accounts were generally good, the buyer had a Reserve Agreement where he held out a substantial chunk of payment pending the A/R, with the right to deduct from the final payment any non collection past a certain date.
Could be same for PO gift cards. Hold out a few thou for a year to see what comes through.

 

[Joey Camb]

I am not sure how you are buying this business.
There are normally two ways:
Asset Sale - you buy the property, furnishings, equipment, customer list, etc. Then you file as a new business with a new name and tax ID. In this case, I doubt you are responsible. That is the prior owner's obligation.
Buying the business itself - such as an S corp, LLC, sole proprietorship, etc.. You keep the old business open with the same tax ID and name. In this case, you may be obligated to keep the contract. This is rarely a good way to buy a business, regardless of claims made by the prior owner or their broker or lawyer. I got stung years ago when I bought an S corp, for unpaid tax obligations, unpaid workmen's comp fines and other problems. You also inherit their liabilities, such as if someone who stayed there a year ago and filed a lawsuit..

More words of advise for those buying turn-key (this is what you should be getting for your $$ with your B&B consultant but you won't - so I am offering it for free - please make a note):
TAXES
Another thing that will happen is you will get the tax bill - here it is due in December, and it is for the previous year. So what this means is the PO's are off in France and you have to pay it or else. It was for the year THEY owned and operated, and now it is your business.
You can fight them and tell them we are a diff business now, even if you change the name of the B&B and they will tell you the tax parcel # and you are obligated to pay it.
Legally the former owners are obligated to pay, but try to get them to do so...I am sharing this NOW so you who buy a "turn key" B&B are aware that this is another one that will show up when they are long gone...
MARKETING RENEWALS
Another thing that happened to us is that the prev owners let all marketing lapse, that should be requirement in the contract that all are paid and up to date. What this meant was we walked in and had a stack of renewals a mile high and had to fork out a ton of CASH to pay for them all to keep the business running. Cash we didn't have. Most of us use fewer B&B directories and such now.
OPERATING EXPENSES
Make sure you have some operating expense $ as there will be surprises.
The president of our B&B association is on this forum, and in fact that is how we met. I spoke to her and said "We have no business, no revenue stream it is winter and the state assoc renewal is due Jan 1 (which many of them are) and they did not accept Visa. Is there a payment plan? What can we do?
We were up a creek. We had tax payments, and a hefty amount of annual renewals due Jan 1. DH went out and got a job...and has worked ever since.
FALSIFYING REVENUE
The B&B consultant has a disclaimer that they are not responsible for any facts and figures. So on our transaction they had a CASH line on their revenue stream excel paperwork. This was a lie. A bold faced lie. Ex: so far this year we have had not one cash payment here from guests. So all that to say don't trust the former innkeepers as far as you can throw them.
I am not the only one, there are 3 or 4 here who had encountered the same thing. Some want out, bad, and are willing to do anything to sell their place. I want to let you know this. I am honest, 100% of the time, and want the buyers of this place to have as much information and everything they need to succeed and continue on here. But then that is prob why we are still for sale! ha If I fudged the numbers... How did they fudge them you ask? They ran it as an S Corp and included other business transactions in their tax return. It was not separated out. So the numbers were inflated.
CONVEYANCE
If you don't take photos of each room and porch, grounds, shop, attic, basement, garage, etc they may also take things that you thought conveyed for the business. But on the opposite spectrum they will also leave every drawer full of junk and say it is for the business. So you will move in and have nowhere to put your stuff.
Porch swing - gone. Rugs - gone. Beds - taken and replaced with different beds and dressers. Fine china - switched out. Curtains in two rooms - gone.
Broken down gas grill - left. Broken down lawn mower - left. Tablecloths that don't fit any tables - left. Pieces of this and that and every drawer filled with random things you don't know what they are or what for - left.
Paint colors - not marked down anywhere for touch up. Reservation info from prev guests - index card system, gone.
If I think of any others I will add them later.
.

More words of advise for those buying turn-key (this is what you should be getting for your $
MARKETING RENEWALS
FALSIFYING REVENUE
The B&B consultant has a disclaimer that they are not responsible for any facts and figures. So on our transaction they had a CASH line on their revenue stream excel paperwork.
They ran it as an S Corp and included other business transactions in their tax return. It was not separated out. So the numbers were inflated.
CONVEYANCE
If you don't take photos of each room and porch, grounds, shop, attic, basement, garage, etc they may also take things that you thought conveyed for the business. But on the opposite spectrum they will also leave every drawer full of junk and say it is for the business. So you will move in and have nowhere to put your stuff.

My thoughts:
Marketing Renewals: They should be pro-rated at closing. Ask for a list with pricing and have the attorney figure it out
Falsifying Revnue
Reminds me of a for sale Rome GA B&B (1996) which tried to convince us all their wedding revenue was cash and they could support the huge asking price without any proof. The rule is this: What you report to the sales tax people and what you report to the IRS is the truth and the only truth. If you aren't reporting cash sales then you didn't have any!
I use Resnexus and we put ALL cash into the system (guest by guest). And that includes the biggie--cash for Deneen mugs. We are truthful, too. That revenue does count when you are for sale. Nobody will consider seeking financing based on the promise of cash sales with no proof....
We have provided the key pages of our IRS filing to the business consultant. Yes, we have "another business" (a rental house) but I think that is clearly shown on a different form which is NOT provided to the consultant or the buyer. Recently, we removed the vacation rental used in conjunction with the inn so the numbers are clean. The inn price went down as a result and so did revenue earned (by a little bit since cottage isn't a big part of what we do). Buyers didn't seem interested in something 7 miles away. It can always come back on the table and the info come back, too.
One looker/buyer wanted to know my mortgage payment. THAT is NOHDB. (For one thing, our mortgage is not for 100% of the value of the property; it is an after-the-fact equity loan so the amount has NO bearing on what a new owner would be paying. Mind your own business, missy.)
Conveyance
When we sold our first inn as an office building, they tossed a bunch of stuff in the street/trash. I took some of it with me (books, decor, etc.) We also asked permission to remove a couple of items we KNEW they would have to remove and we had a use for it. ASK.
Artwork:
I have been changing out all my fine art for lesser items PRIOR to finding a buyer. They will then not make the mistake of thinking they are getting the art collection when they are not. Unlike some sellers, I'm not buying junk. The price is not in the hundreds but the taste in the art still has to fit the inn as it stands today. I've found Habitat stores to be a good source!
We have said "turnkey at 98%." That does allow for the 2% which is family antiques which have to be removed. I figure we can also negotiate the other stuff. Even people buying turnkey often have stuff they want to use or could use They SHOULD have something to add. I strongly feel that THEIR art will change the place and it should! I will leave with furniture from one of two foyers. That's about 4 pieces of furniture. It will be stated up front. I'll give in IF they can't live without it, but none of what needs to leave is critical to operating the inn.
Turnkey is a funny thing: If taken strictly, we will leave with our personal 5 bureaus, one bed, 2 office chairs and two lawn chairs (stored in the shed). Realistically, we are likely to leave with some of the office file cabinets because only "old school" people even CARE about file cabinets. The last couple through here kinda laughed, saying "what would we do with those???"
I did ask my consultant about "kitchen items and gadgets." HE said: leave what it takes to make a standard breakfast. ... well, the kitchen will be very empty. We also don't have a fancy Kitchen-aide mixer or Cuisinart food processor so IF they can't cook pancakes or French toast without those (we do it) they'll need to bring their own. Food gadgets are pretty personal stuff so.... it gets packed. Of course we can't pack it yet--we're using it!!! Most of my stuff was wedding gifts 43 years ago. One does have to wonder WHY anyone would want it, LOL!
Most inns can benefit from a linens yard sale. I made about $800 a few years ago selling off slightly stained, tired, etc. linens. I still have a pile but it is much smaller.
By the way, gift shop items and inventory has to be conveyed: 50 Deneen mugs with probably another 100 on the way. Value: $1500 or so. However, IF I sold today (before ordering those 100 for "the season"), yes, they'd get 50 and the option to pick their own colors/shapes. Logo conveys, of course. I would think everyone would let the soap supply and mugs supply run down--you really do not know WHAT the new people will want to do. They might not LIKE the soap or hate the mug shape/colors. I think "most" new owners also change the linens to "their own taste." I'm perfectly willing to take anything they absolutely hate if it is headed to the dump. Like I said: It is possible we'll exit here with a bed, some bureaus, 2 lawn chairs and our mothers' tables which are in storage. My truck full of antique lumber and garden tools will be far larger than my van full of furniture.
Watch out for what I call evil substitutions. I know an owner who bought "oak bureaus" (per the contract).... she got "oak patterned cardboard bureaus."
.

true - I personally think it might pay for buyers to take photographs because otherwise its hard to prove afterwards
My chum is selling one large B&B and buying a smaller one - said she isn't taking much as she wants to buy all new!

 

[gillumhouse]

I am not sure how you are buying this business.
There are normally two ways:
Asset Sale - you buy the property, furnishings, equipment, customer list, etc. Then you file as a new business with a new name and tax ID. In this case, I doubt you are responsible. That is the prior owner's obligation.
Buying the business itself - such as an S corp, LLC, sole proprietorship, etc.. You keep the old business open with the same tax ID and name. In this case, you may be obligated to keep the contract. This is rarely a good way to buy a business, regardless of claims made by the prior owner or their broker or lawyer. I got stung years ago when I bought an S corp, for unpaid tax obligations, unpaid workmen's comp fines and other problems. You also inherit their liabilities, such as if someone who stayed there a year ago and filed a lawsuit..

More words of advise for those buying turn-key (this is what you should be getting for your $$ with your B&B consultant but you won't - so I am offering it for free - please make a note):
TAXES
Another thing that will happen is you will get the tax bill - here it is due in December, and it is for the previous year. So what this means is the PO's are off in France and you have to pay it or else. It was for the year THEY owned and operated, and now it is your business.
You can fight them and tell them we are a diff business now, even if you change the name of the B&B and they will tell you the tax parcel # and you are obligated to pay it.
Legally the former owners are obligated to pay, but try to get them to do so...I am sharing this NOW so you who buy a "turn key" B&B are aware that this is another one that will show up when they are long gone...
MARKETING RENEWALS
Another thing that happened to us is that the prev owners let all marketing lapse, that should be requirement in the contract that all are paid and up to date. What this meant was we walked in and had a stack of renewals a mile high and had to fork out a ton of CASH to pay for them all to keep the business running. Cash we didn't have. Most of us use fewer B&B directories and such now.
OPERATING EXPENSES
Make sure you have some operating expense $ as there will be surprises.
The president of our B&B association is on this forum, and in fact that is how we met. I spoke to her and said "We have no business, no revenue stream it is winter and the state assoc renewal is due Jan 1 (which many of them are) and they did not accept Visa. Is there a payment plan? What can we do?
We were up a creek. We had tax payments, and a hefty amount of annual renewals due Jan 1. DH went out and got a job...and has worked ever since.
FALSIFYING REVENUE
The B&B consultant has a disclaimer that they are not responsible for any facts and figures. So on our transaction they had a CASH line on their revenue stream excel paperwork. This was a lie. A bold faced lie. Ex: so far this year we have had not one cash payment here from guests. So all that to say don't trust the former innkeepers as far as you can throw them.
I am not the only one, there are 3 or 4 here who had encountered the same thing. Some want out, bad, and are willing to do anything to sell their place. I want to let you know this. I am honest, 100% of the time, and want the buyers of this place to have as much information and everything they need to succeed and continue on here. But then that is prob why we are still for sale! ha If I fudged the numbers... How did they fudge them you ask? They ran it as an S Corp and included other business transactions in their tax return. It was not separated out. So the numbers were inflated.
CONVEYANCE
If you don't take photos of each room and porch, grounds, shop, attic, basement, garage, etc they may also take things that you thought conveyed for the business. But on the opposite spectrum they will also leave every drawer full of junk and say it is for the business. So you will move in and have nowhere to put your stuff.
Porch swing - gone. Rugs - gone. Beds - taken and replaced with different beds and dressers. Fine china - switched out. Curtains in two rooms - gone.
Broken down gas grill - left. Broken down lawn mower - left. Tablecloths that don't fit any tables - left. Pieces of this and that and every drawer filled with random things you don't know what they are or what for - left.
Paint colors - not marked down anywhere for touch up. Reservation info from prev guests - index card system, gone.
If I think of any others I will add them later.
.

More words of advise for those buying turn-key (this is what you should be getting for your $
MARKETING RENEWALS
FALSIFYING REVENUE
The B&B consultant has a disclaimer that they are not responsible for any facts and figures. So on our transaction they had a CASH line on their revenue stream excel paperwork.
They ran it as an S Corp and included other business transactions in their tax return. It was not separated out. So the numbers were inflated.
CONVEYANCE
If you don't take photos of each room and porch, grounds, shop, attic, basement, garage, etc they may also take things that you thought conveyed for the business. But on the opposite spectrum they will also leave every drawer full of junk and say it is for the business. So you will move in and have nowhere to put your stuff.

My thoughts:
Marketing Renewals: They should be pro-rated at closing. Ask for a list with pricing and have the attorney figure it out
Falsifying Revnue
Reminds me of a for sale Rome GA B&B (1996) which tried to convince us all their wedding revenue was cash and they could support the huge asking price without any proof. The rule is this: What you report to the sales tax people and what you report to the IRS is the truth and the only truth. If you aren't reporting cash sales then you didn't have any!
I use Resnexus and we put ALL cash into the system (guest by guest). And that includes the biggie--cash for Deneen mugs. We are truthful, too. That revenue does count when you are for sale. Nobody will consider seeking financing based on the promise of cash sales with no proof....
We have provided the key pages of our IRS filing to the business consultant. Yes, we have "another business" (a rental house) but I think that is clearly shown on a different form which is NOT provided to the consultant or the buyer. Recently, we removed the vacation rental used in conjunction with the inn so the numbers are clean. The inn price went down as a result and so did revenue earned (by a little bit since cottage isn't a big part of what we do). Buyers didn't seem interested in something 7 miles away. It can always come back on the table and the info come back, too.
One looker/buyer wanted to know my mortgage payment. THAT is NOHDB. (For one thing, our mortgage is not for 100% of the value of the property; it is an after-the-fact equity loan so the amount has NO bearing on what a new owner would be paying. Mind your own business, missy.)
Conveyance
When we sold our first inn as an office building, they tossed a bunch of stuff in the street/trash. I took some of it with me (books, decor, etc.) We also asked permission to remove a couple of items we KNEW they would have to remove and we had a use for it. ASK.
Artwork:
I have been changing out all my fine art for lesser items PRIOR to finding a buyer. They will then not make the mistake of thinking they are getting the art collection when they are not. Unlike some sellers, I'm not buying junk. The price is not in the hundreds but the taste in the art still has to fit the inn as it stands today. I've found Habitat stores to be a good source!
We have said "turnkey at 98%." That does allow for the 2% which is family antiques which have to be removed. I figure we can also negotiate the other stuff. Even people buying turnkey often have stuff they want to use or could use They SHOULD have something to add. I strongly feel that THEIR art will change the place and it should! I will leave with furniture from one of two foyers. That's about 4 pieces of furniture. It will be stated up front. I'll give in IF they can't live without it, but none of what needs to leave is critical to operating the inn.
Turnkey is a funny thing: If taken strictly, we will leave with our personal 5 bureaus, one bed, 2 office chairs and two lawn chairs (stored in the shed). Realistically, we are likely to leave with some of the office file cabinets because only "old school" people even CARE about file cabinets. The last couple through here kinda laughed, saying "what would we do with those???"
I did ask my consultant about "kitchen items and gadgets." HE said: leave what it takes to make a standard breakfast. ... well, the kitchen will be very empty. We also don't have a fancy Kitchen-aide mixer or Cuisinart food processor so IF they can't cook pancakes or French toast without those (we do it) they'll need to bring their own. Food gadgets are pretty personal stuff so.... it gets packed. Of course we can't pack it yet--we're using it!!! Most of my stuff was wedding gifts 43 years ago. One does have to wonder WHY anyone would want it, LOL!
Most inns can benefit from a linens yard sale. I made about $800 a few years ago selling off slightly stained, tired, etc. linens. I still have a pile but it is much smaller.
By the way, gift shop items and inventory has to be conveyed: 50 Deneen mugs with probably another 100 on the way. Value: $1500 or so. However, IF I sold today (before ordering those 100 for "the season"), yes, they'd get 50 and the option to pick their own colors/shapes. Logo conveys, of course. I would think everyone would let the soap supply and mugs supply run down--you really do not know WHAT the new people will want to do. They might not LIKE the soap or hate the mug shape/colors. I think "most" new owners also change the linens to "their own taste." I'm perfectly willing to take anything they absolutely hate if it is headed to the dump. Like I said: It is possible we'll exit here with a bed, some bureaus, 2 lawn chairs and our mothers' tables which are in storage. My truck full of antique lumber and garden tools will be far larger than my van full of furniture.
Watch out for what I call evil substitutions. I know an owner who bought "oak bureaus" (per the contract).... she got "oak patterned cardboard bureaus."
.

true - I personally think it might pay for buyers to take photographs because otherwise its hard to prove afterwards
My chum is selling one large B&B and buying a smaller one - said she isn't taking much as she wants to buy all new!
.

I am planning to take only my personal belongings (which includes the paintings as they are by Himself or his sister). I want them ready to go the day I leave.

 

[happykeeper]

I am not sure how you are buying this business.
There are normally two ways:
Asset Sale - you buy the property, furnishings, equipment, customer list, etc. Then you file as a new business with a new name and tax ID. In this case, I doubt you are responsible. That is the prior owner's obligation.
Buying the business itself - such as an S corp, LLC, sole proprietorship, etc.. You keep the old business open with the same tax ID and name. In this case, you may be obligated to keep the contract. This is rarely a good way to buy a business, regardless of claims made by the prior owner or their broker or lawyer. I got stung years ago when I bought an S corp, for unpaid tax obligations, unpaid workmen's comp fines and other problems. You also inherit their liabilities, such as if someone who stayed there a year ago and filed a lawsuit..

More words of advise for those buying turn-key (this is what you should be getting for your $$ with your B&B consultant but you won't - so I am offering it for free - please make a note):
TAXES
Another thing that will happen is you will get the tax bill - here it is due in December, and it is for the previous year. So what this means is the PO's are off in France and you have to pay it or else. It was for the year THEY owned and operated, and now it is your business.
You can fight them and tell them we are a diff business now, even if you change the name of the B&B and they will tell you the tax parcel # and you are obligated to pay it.
Legally the former owners are obligated to pay, but try to get them to do so...I am sharing this NOW so you who buy a "turn key" B&B are aware that this is another one that will show up when they are long gone...
MARKETING RENEWALS
Another thing that happened to us is that the prev owners let all marketing lapse, that should be requirement in the contract that all are paid and up to date. What this meant was we walked in and had a stack of renewals a mile high and had to fork out a ton of CASH to pay for them all to keep the business running. Cash we didn't have. Most of us use fewer B&B directories and such now.
OPERATING EXPENSES
Make sure you have some operating expense $ as there will be surprises.
The president of our B&B association is on this forum, and in fact that is how we met. I spoke to her and said "We have no business, no revenue stream it is winter and the state assoc renewal is due Jan 1 (which many of them are) and they did not accept Visa. Is there a payment plan? What can we do?
We were up a creek. We had tax payments, and a hefty amount of annual renewals due Jan 1. DH went out and got a job...and has worked ever since.
FALSIFYING REVENUE
The B&B consultant has a disclaimer that they are not responsible for any facts and figures. So on our transaction they had a CASH line on their revenue stream excel paperwork. This was a lie. A bold faced lie. Ex: so far this year we have had not one cash payment here from guests. So all that to say don't trust the former innkeepers as far as you can throw them.
I am not the only one, there are 3 or 4 here who had encountered the same thing. Some want out, bad, and are willing to do anything to sell their place. I want to let you know this. I am honest, 100% of the time, and want the buyers of this place to have as much information and everything they need to succeed and continue on here. But then that is prob why we are still for sale! ha If I fudged the numbers... How did they fudge them you ask? They ran it as an S Corp and included other business transactions in their tax return. It was not separated out. So the numbers were inflated.
CONVEYANCE
If you don't take photos of each room and porch, grounds, shop, attic, basement, garage, etc they may also take things that you thought conveyed for the business. But on the opposite spectrum they will also leave every drawer full of junk and say it is for the business. So you will move in and have nowhere to put your stuff.
Porch swing - gone. Rugs - gone. Beds - taken and replaced with different beds and dressers. Fine china - switched out. Curtains in two rooms - gone.
Broken down gas grill - left. Broken down lawn mower - left. Tablecloths that don't fit any tables - left. Pieces of this and that and every drawer filled with random things you don't know what they are or what for - left.
Paint colors - not marked down anywhere for touch up. Reservation info from prev guests - index card system, gone.
If I think of any others I will add them later.
.

More words of advise for those buying turn-key (this is what you should be getting for your $
MARKETING RENEWALS
FALSIFYING REVENUE
The B&B consultant has a disclaimer that they are not responsible for any facts and figures. So on our transaction they had a CASH line on their revenue stream excel paperwork.
They ran it as an S Corp and included other business transactions in their tax return. It was not separated out. So the numbers were inflated.
CONVEYANCE
If you don't take photos of each room and porch, grounds, shop, attic, basement, garage, etc they may also take things that you thought conveyed for the business. But on the opposite spectrum they will also leave every drawer full of junk and say it is for the business. So you will move in and have nowhere to put your stuff.

My thoughts:
Marketing Renewals: They should be pro-rated at closing. Ask for a list with pricing and have the attorney figure it out
Falsifying Revnue
Reminds me of a for sale Rome GA B&B (1996) which tried to convince us all their wedding revenue was cash and they could support the huge asking price without any proof. The rule is this: What you report to the sales tax people and what you report to the IRS is the truth and the only truth. If you aren't reporting cash sales then you didn't have any!
I use Resnexus and we put ALL cash into the system (guest by guest). And that includes the biggie--cash for Deneen mugs. We are truthful, too. That revenue does count when you are for sale. Nobody will consider seeking financing based on the promise of cash sales with no proof....
We have provided the key pages of our IRS filing to the business consultant. Yes, we have "another business" (a rental house) but I think that is clearly shown on a different form which is NOT provided to the consultant or the buyer. Recently, we removed the vacation rental used in conjunction with the inn so the numbers are clean. The inn price went down as a result and so did revenue earned (by a little bit since cottage isn't a big part of what we do). Buyers didn't seem interested in something 7 miles away. It can always come back on the table and the info come back, too.
One looker/buyer wanted to know my mortgage payment. THAT is NOHDB. (For one thing, our mortgage is not for 100% of the value of the property; it is an after-the-fact equity loan so the amount has NO bearing on what a new owner would be paying. Mind your own business, missy.)
Conveyance
When we sold our first inn as an office building, they tossed a bunch of stuff in the street/trash. I took some of it with me (books, decor, etc.) We also asked permission to remove a couple of items we KNEW they would have to remove and we had a use for it. ASK.
Artwork:
I have been changing out all my fine art for lesser items PRIOR to finding a buyer. They will then not make the mistake of thinking they are getting the art collection when they are not. Unlike some sellers, I'm not buying junk. The price is not in the hundreds but the taste in the art still has to fit the inn as it stands today. I've found Habitat stores to be a good source!
We have said "turnkey at 98%." That does allow for the 2% which is family antiques which have to be removed. I figure we can also negotiate the other stuff. Even people buying turnkey often have stuff they want to use or could use They SHOULD have something to add. I strongly feel that THEIR art will change the place and it should! I will leave with furniture from one of two foyers. That's about 4 pieces of furniture. It will be stated up front. I'll give in IF they can't live without it, but none of what needs to leave is critical to operating the inn.
Turnkey is a funny thing: If taken strictly, we will leave with our personal 5 bureaus, one bed, 2 office chairs and two lawn chairs (stored in the shed). Realistically, we are likely to leave with some of the office file cabinets because only "old school" people even CARE about file cabinets. The last couple through here kinda laughed, saying "what would we do with those???"
I did ask my consultant about "kitchen items and gadgets." HE said: leave what it takes to make a standard breakfast. ... well, the kitchen will be very empty. We also don't have a fancy Kitchen-aide mixer or Cuisinart food processor so IF they can't cook pancakes or French toast without those (we do it) they'll need to bring their own. Food gadgets are pretty personal stuff so.... it gets packed. Of course we can't pack it yet--we're using it!!! Most of my stuff was wedding gifts 43 years ago. One does have to wonder WHY anyone would want it, LOL!
Most inns can benefit from a linens yard sale. I made about $800 a few years ago selling off slightly stained, tired, etc. linens. I still have a pile but it is much smaller.
By the way, gift shop items and inventory has to be conveyed: 50 Deneen mugs with probably another 100 on the way. Value: $1500 or so. However, IF I sold today (before ordering those 100 for "the season"), yes, they'd get 50 and the option to pick their own colors/shapes. Logo conveys, of course. I would think everyone would let the soap supply and mugs supply run down--you really do not know WHAT the new people will want to do. They might not LIKE the soap or hate the mug shape/colors. I think "most" new owners also change the linens to "their own taste." I'm perfectly willing to take anything they absolutely hate if it is headed to the dump. Like I said: It is possible we'll exit here with a bed, some bureaus, 2 lawn chairs and our mothers' tables which are in storage. My truck full of antique lumber and garden tools will be far larger than my van full of furniture.
Watch out for what I call evil substitutions. I know an owner who bought "oak bureaus" (per the contract).... she got "oak patterned cardboard bureaus."
.

I found this to be very informative. As wee have begun our five year plan, we will come to that time when the inn will need to be looked at this way. I could see walking out the door and leaving a turnkey product behind. I suppose we could hire some help for a couple of days and get rid of all the stray miscellaneous that new owners would find a nuisance. One last tent sale.