What does buying a business cost beyond the purchase price?

Written by Kaz · Published 27 September 2026 · How figures are checked

Summary

Beyond the price, a buyer pays for an attorney, an accountant, sometimes a broker or an appraiser, and the working capital to run the business after closing. The paperwork includes a sale agreement that says whether you are buying assets or stock, and in an asset purchase both buyer and seller report the price allocation to the IRS on Form 8594. An SBA 7(a) loan can finance a complete or partial change of ownership and carry working capital in the same loan.

Price first, then the loan

SBA tells buyers to value the business before agreeing to a sale and suggests hiring a qualified business appraiser, which is where the appraisal fee comes from. Its list of valuation methods includes capitalized earnings, excess earnings, tangible assets, specific intangible assets, and cash flow. For a buyer who will borrow, the cash flow method is the one that matters, because SBA describes it as the way to work out how much of a loan the business's cash flow can support. The value tells you whether you can pay outright or need financing; the cash flow figure tells you how much of that financing the business itself can repay.

Who you hire and what gets signed

The attorney and the accountant are the fees nearly every buyer pays, because SBA recommends bringing both in at this stage. The accountant works out the full cost of buying and running the business and helps estimate profit, and that running cost is the working capital figure: the cash the business needs between closing and the point where its own receipts cover payroll and suppliers. Together they prepare and review the letter of intent, a confidentiality agreement, existing contracts and leases, financial statements, tax returns, the sales agreement, and any purchase price adjustment.

The sales agreement covers the purchase of assets or stock. SBA says it should list all inventory in the sale, set out how the business will be run before closing and how much access each side has to financial information, and note adjustments, broker fees, and other terms. After the transfer, the ownership change is registered with the state.

The allocation both sides report

When a buyer acquires a group of assets that makes up a trade or business and goodwill could attach, the buyer and the seller each attach Form 8594 to their income tax return for the year of the sale. The price is allocated through seven classes in order:

Class I: cash and bank deposits other than certificates of deposit
Class II: actively traded property such as publicly traded stock, plus CDs and foreign currency
Class III: receivables and assets marked to market each year
Class IV: inventory
Class V: furniture, fixtures, buildings, land, vehicles, and equipment
Class VI: Section 197 intangibles other than goodwill, such as customer relationships, licenses, noncompetes, and trademarks
Class VII: goodwill and going concern value

No asset outside Class VII can take more than its fair market value on the purchase date, so whatever is left of the price lands in goodwill. The class a dollar lands in affects how each side treats it for tax, so the allocation is part of the negotiation and not a formality. If the allocation changes later, the party affected files a new Form 8594 with the return for the year the change is taken into account.

Where 7(a) and the seller fit

SBA lists complete and partial changes of ownership among eligible 7(a) uses, alongside working capital, equipment, and real estate, and one loan can combine them. That is what lets the price and the first months of operating cash be financed together rather than paid from separate pockets.

If the seller takes part of the price as a note, the SBA lender may require that debt to stand behind its loan. SBA Form 155, the Standby Creditor's Agreement, has the seller subordinate any lien rights in the collateral to the SBA lender and take no action against the borrower or the collateral without the lender's consent. Lenders may use Form 155 or their own standby form, and a copy of the note is attached. The terms of the note itself are covered in the seller financing article.