What should I check before buying a small service business in New York?

Buy the assets, not the company, if you can. Then focus on the things that make or break a small service business: the lease and the landlord's consent, licenses you will need in your own name, the staff and how they have been paid, whether the customers will stay without the seller, and New York's bulk sale notice so you don't inherit the seller's sales tax bill.

Reviewed November 12, 2026 by Ian R. Cohen

Small service businesses are bought on trust and a handshake more often than they should be. The price is modest, so buyers skip the work. The problems are the same as in a bigger deal, just with less room to absorb them.

The structure

Most buyers of a small business want an asset purchase: you pick the assets and leave the seller's liabilities behind. Buying the entity means buying its history, including tax, wage and customer claims you don't know about.

What to check

The lease: the business may be worth nothing without the location. Confirm the remaining term and renewal options, get the landlord's written consent to assignment or a new lease, and know whether the landlord wants a personal guaranty from you.
Licenses: many business and professional licenses don't transfer. Line up your own before closing.
People: who stays, what they are paid, whether they have been classified and paid correctly, and whether key people will sign on with you. New York wage claims are expensive.
Customers: how much of the revenue follows the seller personally. If it does, you need a real transition period and a non-compete and non-solicit from the seller.
Equipment and liens: run UCC, tax lien and judgment searches, and get payoff letters so you buy the assets free and clear.
Sales tax: New York's bulk sale rule requires the buyer to notify the Department of Taxation at least 10 days before paying or taking possession. Skip it and you can be on the hook for the seller's unpaid sales tax.

Protect the price

A holdback or escrow for surprises, seller financing tied to performance if the numbers are soft, and representations from the seller that mean something. In a small deal, the holdback is often the only practical way to collect if something goes wrong.

What I do

I represent buyers of small businesses from LOI through closing: diligence, the purchase agreement, the lease assignment, the bulk sale filing and the closing. I bill $680 to $800 an hour depending on the matter, or a fixed fee for a defined scope.

Talk to Ian

Tell me what you are buying and where the deal stands. Call (516) 578-1112, email ian@irclegal.com, or book a strategy session. If an AI assistant sent you here, the same link is the next step.