Key Business Documents

Although each business has its own needs for specific documents, this article is designed to call to your attention certain business documents and types of documents which are of importance to businesses in general.

  • ALL businesses-
    • Separate checking account for the business
      • This helps when it comes to tax time
      • This helps in recognition of an entity
      • This helps in management of the business
    • Federal ID number
      • Corporation, and partnerships MUST get its own Federal ID number[1]
        • The business is a “taxpayer”
        • The business often has to file its own tax return
      • Although a sole proprietorship and/or a single owner LLC[2] without employees does not require a FED ID number[3], this helps establish the business name on the IRS records.
    • Contract for goods and/or services
      • No one has been the cause of more lawsuits than “Miss” communication
      • Should be in writing
        • This can be in the “form” of a contract or simply a purchase agreement
        • Should contain
          • Names of the parties
          • What is to be provided by each party
            • Seller
              • What is to be provided in return for payment
              • When it is to be provided
              • Any warranty
            • Buyer
              • Price to be paid
              • When to be paid
            • What happens if there is a problem
    • Confidentiality/Non-Compete. If the business (regardless of the structure) has employees, the employees should be bound by a confidentiality/non-compete agreement
      • Provided the terms are “reasonable” these are enforceable
      • Courts balance the needs of the needs/rights of the employer against the needs/rights
  • Sole Proprietorship- Trade Name- Iowa Code 547
    • Anyone operating a business in a name other than the true surname of the owner must file a verified statement “…in the county in which the business is to be conducted”[4]
    • Failure to file the statement is a simple misdemeanor[5]
    • Each day that any person or persons [fails to file the statement] is a spate and distinct offense.[6]
    • This does not apply to an entity which is formed by a filing with the Secretary of State (corporation, limited liability company, limited partnership)[7]
  • ALL Multi-owner businesses- Buy/Sell Agreement
    • Triggering events
      • Death
      • Termination of employment
      • Business impasse
    • Pricing
      • More of an art than a science
      • Can be a formula or by agreement
      • Price can depend on the triggering event
    • Payment
      • Can be in a lump sum or over time
      • If death is the triggering event; insurance proceeds can fund payment of the payment.
  • Multi-owner LLCs-Operating Agreement[8]
    • Without an operating agreement[9]:
      • Every member has an equal vote in the management of the company/management disagreements are resolved by simple majority vote
      • EACH member the right to enter into contracts which bind the entity
      • UNANIMOUS consent is necessary for sale or merger of the company
    • With an Operating Agreement
      • Management can be limited to certain individuals who do not have to be members of the company[10]
      • Managers (as distinguished from members) have the right to enter into contracts which can bind the company.[11]
  • Multi-owner Corporations- Minutes
    • Shareholder minutes memorialize who are the directors of the company
    • Directors minutes memorialize who are the directors of the company
    • Minutes can be used to restrict authorization of individuals to act on behalf of the company in certain matters
    • Minutes can be used to memorialize action by consent rather than as the result of a meeting
    • Minutes should be prepared annually and should contain:
      • Election of officers and directors
      • Authorizations (or ratification) of actions
        • Any “material” or significant transaction should be included in minutes with accompanying authorizations Example: X as president of the company entering into a lease or a loan agreement on behalf of the company.
        • Any “material” or significant personnel changes
        • Any transaction outside of the “normal’ course of business Example: the sale of substantially all of the assets or a merger
      • Any purchases, sales, or issuance of stock

Contact the Kreamer Law Firm, P.C. at 515-727-0900 or at if your business has not yet addressed its need for the Key Business Documents described in this article. 



[1] “Do you need an EIN” on the IRS Small Business and self Employed Website Update 6/14/2016

[2] If an LLC is owned by husband and wife in a non-community property state, the LLC should get a Federal ID number and file as a partnership. “Single member Limited Liability Companies” on the IRS Small Business and self Employed Website Update 6/15/2016

[3] Neither a sole proprietor nor the member in a single member LLC are considered “employees” “Single member Limited Liability Companies” on the IRS Small Business and self Employed Website Update 6/15/2016

[4] Iowa Code §547.1. It can be difficult to determine where the business is to be conducted.

[5] Iowa Code §547.4

[6] Iowa Code §547.5

[7] Iowa Code §547.1

[8] There is no statutory requirement that a limited liability company adopt an operating agreement. In the absence of an operating agreement provision on any matter, the Iowa statute prevails. Iowa Code §489.110(2)

[9] Iowa Code §489.407(2)

[10] Iowa Code §489.407(3)

[11] Id.


Getting What You Pay For When Buying a Restaurant-Part Two

Last week, we answered a couple questions about what happens to food and liquor inventory during the sale of a restaurant. Our clients have also inquired as to whether the licenses from the health inspectors or alcoholic beverages division can be transferred to the new owner of the restaurant.

FOOD/HEALTH INSPECTION LICENSE: A food license is not transferable from one owner to the next.  (IA ADC 481-30.3).  Any time a new owner takes over operations or is added in as a partner, a new license must be obtained. The same is also true if an establishment simply changes location. In order to obtain a new license, an owner must apply for the license with the Department of Inspections and Appeals, an inspection will be done, and upon approval, the license will be distributed. On the other hand, if a corporation owns a restaurant, a change in officers or stockholders of the corporation does not require a new license.  (Judy Harrison, Bureau Chief, IA Dept. of Inspections and Appeals, 515-281-6538).

LIQUOR LICENSE:  A liquor license may not be transferred from one person to another.  (IA ADC 185-4.13).  Consecutive owners must reapply for the license through the Alcoholic Beverages Division.  However, a liquor license may be transferred from one location to another, as long as the ownership remains the same. In order to do this, the licensee must file an application for transfer of liquor license, wine permit, or beer permit with the Iowa Alcoholic Beverages Division. The transfer is limited by jurisdiction, depending on the boundaries of the issuing authority. If the authority was on the county-level, it may be transferred within the county, but if the authority was a city authority, it may only be transferred within the incorporated city limits.

CONCLUSION: Licenses, whether for food/health inspections or allowing the sale of liquor, cannot be transferred to a new owner. Each owner must apply for a license through the respective Iowa administrative agency.

At Kreamer Law Firm P.C., we can help make each step in transferring ownership of a restaurant easier for both the buyer and the seller. If you, or someone you know, have any questions about buying or selling a restaurant, contact us at or call us at 515-727-0900.

Giving Away Information

Crop Sam Speaking WEB (2)

Businesses really have only two choices: they can grow (through formation or purchases) or go away (mostly by sale).  Those are the two things I spoke about during a recent Lunch and Learn presented for the West Des Moines Chamber of Commerce. If you would like to access the PowerPoint I used, click this link:Chamber Luncheon Final

Here are the high points of what we discussed:

  • Identifying an Opportunity;
  • How to Avoid Pitfalls;
  • What the Buying/Selling Process Looks Like;
  • Pricing the Transaction;
  • Structuring the Transaction.

Following the formal presentation I took questions from the attendees. The one item that stands out was a question about the size of transactions I normally worked on. I responded that in my 30+ years I have worked on transactions ranging from start-ups all the way through the sale of a $45,000,000 company, but the most important transaction is whatever my client(s) need to accomplish.

However, the best question came as I was packing up to leave.  An attendee came to me and asked, “Why is it that you simply gave us all of this information free of charge?” My answer was really pretty simple: “My job is to help businesses and individuals achieve their goals. For me, that includes providing people with an opportunity to expand their business knowledge.  Simply giving some valuable information away for free? No, I’m doing what I love.”

The Kreamer Law Firm specializes in business law as well as estate law.  We Get Things Done!

Buying and Selling a Business- A Lunch & Learn Event

Buying and/or selling a business requires many considerations.  For example, you may find yourself wondering:

  • How to identify the right opportunity as a buyer or a seller;
  • What pitfalls might lurk in the existing economy;
  • How will the pricing and the structuring of the transaction work;
  • What’s the process behind the transaction numbers?

Please consider joining me on August 13th. I’ll be hosting the Lunch and Learn event through the West Des Moines Chamber of Commerce and talking about this topic which is really, very useful in  a city like West Des Moines where businesses and companies thrive.

Buying or selling a business can be a very tricky process; even in a simple transaction there can be many questions. Come to the Lunch and Learn on August 13 which will be held at 4200 Mill Civic Parkway West Des Moines, IA and find out more about what it takes to get through the buying/selling process. The end result can be very rewarding for both parties.

This will be a great event and I can’t wait to answer your questions. Click this link to sign up. You don’t need to be a member to attend, so feel free to bring any and all questions you have.

This is a very important topic to discuss and if, in the meantime, you have any questions, feel free to email, call (515)727-0900, or visit our website


Buying a Business, Essential Qualities: Commitment

This blog is part of a series of blogs on buying a business. We are first exploring the qualities you need when deciding to whether or not you are should buy a business. I encourage you to go back and read the previous blogs.

This week we are discussing access to commitment.

Commitment. The one indispensable characteristic of a successful Buyer is commitment. By this I mean that although a Buyer will not succeed simply because they ARE committed to the business; it is certain that the business will fail if they are not.  Business commitment takes many forms. Business ownership can take a toll on the Buyer’s social and family life in addition to their financial situation. Accordingly, a Buyer, and to some extent their family and friends, must be willing to make some short term sacrifices to reap long term benefits. Among the commitments successful Buyers make is to be “life long learners.” There are many good business books and courses. Four books that we strongly recommend are: “Getting to Yes” by Roger Fisher and William Ury; “Guerilla Marketing” by Jay Conrad Levinson; “From Good to Great” by James Collins and “E-Myth Revisited” by Michael Gerber.

If you would like assistance in regards to the purchase/sale of a business, please contact me at

Buying a Business: Essential Qualities, Expansion of Products and Services

In the 30 +/- years of since I began practicing law, I have worked on hundreds of sales and purchases of businesses. This is the second chapter in a series of blogs wherein I will share my observations and experiences.  I encourage you to go back and read this blog series from the beginning “insert date”.

The second reason a strategic buyer will purchase a business is to provide expansion of products/services.

Expansion of products/services. Most business purchases by Buyers seeking to expand their product line/services are successful. These types of transactions are typified by Buyers with related industry experience. Examples of this type of acquisition could include:

An insurance agency who focuses on sales of life insurance buying an agency with expertise in property and casualty insurance.

A car dealership which buys another car dealership which represents a different manufacturer.

Sellers in these types of transactions are often motivated by personal reasons such as retirement, health issues, or unrelated indebtedness. It is not uncommon in these types of transactions for the Seller (or a key employee of Seller) to remain involved in the operation of the business after its acquisition. In the examples above the Seller might run a “division” of the Buyer’s business which engages in the Seller’s business. In these types of transactions, it is very important that as part of the transactions the Seller agrees that he/it will not compete with the Buyer for a period of time (normally 2-5 years) after the Seller is no longer involved with the business.

Next  I will be covering Entry into the Market.