What documents do I need to sell my business?
The documents needed to sell a business come in four sets: the six that set the price (three years of federal returns, the year-to-date P&L and balance sheet, bank statements, the add-back schedule, payroll, revenue by customer), the diligence file the buyer's accountant requests after the NDA, the SBA lender's list, and the Illinois closing set with Form CBS-1 and IRS Form 8594. About 30 items before closing, ten more at the table.
What documents do I need before I even know the price?
Six, and they are the same six a buyer's accountant will open first, so they are worth getting right before anyone else sees them. The federal returns for the last three years, because the earnings get rebuilt from the returns and not from the internal P&L. The year-to-date profit and loss and balance sheet, with the same period of the prior year beside them. Twelve to 36 months of bank statements, because revenue is traced to deposits before any add-back is read. The add-back schedule, tied line by line to the general ledger with receipts, because the add-backs are what turn pre-tax profit into seller's discretionary earnings and SDE is what the price is a multiple of. The payroll register, which proves the owner's compensation and who the key people are. And revenue by customer for three to five years, because one customer over about 20 percent of revenue changes the structure of the offer before it changes the price.
Those six are what the free confidential value range is built from, in simplified form, and what the valuation page walks through. If the add-back schedule does not exist yet, build it first; it is the one document on this page that takes about 30 days rather than a week, and it is the one that moves the number.
What does the buyer's accountant ask for after the NDA?
The diligence request list. It arrives after the letter of intent is signed and it runs to several pages, but it is predictable, and a business that assembles it before going to market spends the 60 to 90 days between the letter of intent and closing closing rather than searching. The table is the list we build in the Exit-Readiness Review, grouped the way a buyer's accountant groups it. The nine items that take the longest to assemble, with the time each one usually takes, are on how to prepare a business for sale.
| Group | Document | What it proves to the buyer |
|---|---|---|
| Financial | Three years of federal returns; year-to-date P&L and balance sheet with the prior-year period; 12 to 36 months of bank and merchant statements | That the earnings are real: revenue traced to deposits, expenses to the ledger |
| Financial | Add-back schedule tied to the ledger, with receipts; accounts receivable and accounts payable agings; debt schedule with payoff amounts; inventory count at cost | SDE, what is owed, and what the working capital really is |
| Tax | Sales and use tax returns (Illinois Form ST-1) and payroll tax filings (Forms 941 and IL-941, the quarterly unemployment report) for the same three years; any notice from the IRS or the Illinois Department of Revenue | That no tax liability follows the assets to the buyer |
| Customers | Revenue by customer for three to five years; customer contracts, master agreements and purchase orders; the backlog or open-order report | Concentration and durability, and which contracts assign |
| Operations | Vendor and supplier agreements; written procedures for quoting, pricing, scheduling and quality; software and subscription list with who owns the licenses | That the business runs on a process, not on the owner's memory |
| People | Employee census with hire dates, pay and role; employment, non-compete and retention agreements; employee handbook; benefit plan documents; any pending claim | Who stays, what they cost, and what the buyer inherits |
| Property | The lease with every amendment and option; the landlord's contact for the assignment consent; or, if you own the building, a market-rent opinion and the deed | Occupancy cost and whether the term covers the buyer's loan |
| Equipment | Fixed-asset list matched to what is on the floor, with serial numbers; equipment leases and titles for vehicles; appraisals where the price leans on equipment | Replacement cost, lender collateral, and what is actually included |
| Legal and entity | Articles of incorporation or organization, bylaws or operating agreement, minutes and ownership ledger; a certificate of good standing from the Illinois Secretary of State; litigation history | That the seller can sell, and what liabilities exist |
| Licenses and insurance | City of Chicago and state business licenses; trade and professional licenses; permits; insurance declarations and the five-year loss run | Assignability, and what has to be reissued in the buyer's name |
Two notes on the table. The bank statements are not optional; a buyer's accountant reads deposits before add-backs, and a business whose deposits do not match its reported revenue has a price problem no document fixes. And the loss run matters more than owners expect, because a buyer's insurance broker quotes from it and a bad year in the run shows up as a higher premium in the buyer's model.
What does the buyer's SBA lender need from me?
Most individual buyers plan to finance the purchase with an SBA 7(a) loan (78 percent in BizBuySell's Q2 2026 survey), so a second reader is going through your file: the lender's underwriter. The lender asks the buyer for the buyer's own documents. From the seller it wants the same three years of federal returns and current interim statements, usually with the agings and the debt schedule, because its credit decision rests on the business's cash flow rather than the buyer's. It orders an independent business valuation in most change-of-ownership deals, so a price set on evidence survives that read and a price set on hope does not. It wants the lease, with its renewal options, to run at least as long as the loan, which is why the lease belongs in the file early and not in the last week. And if part of the price is a seller note that the buyer is counting toward the equity injection, the SBA's SOP 50 10 8 requires that note to be on full standby for the life of the loan, documented on the SBA's standby agreement at closing; how that works, and what it does to the price in cash, is in seller financing and earnouts in Chicago deals.
Which documents are specific to Illinois and Cook County?
Five, and three of them run on clocks that set the closing date. The buyer files Illinois Form CBS-1, the notice of sale, purchase or transfer of business assets, with the Illinois Department of Revenue at least ten business days before closing; the department answers with a release or with the amount it wants withheld from the price, and until it answers a careful buyer holds part of the price back. In Cook County, the county's own bulk-sales notice goes to the Cook County Department of Revenue 45 days before the sale. And inside the city limits there is a third: a business that files Chicago tax returns or holds a city license sends the City of Chicago's Bulk Sales Notification Form, with a copy of the contract, to the Department of Finance at least 45 days before the sale; either side may file it, and if it is late the buyer becomes jointly liable for the seller's unpaid city taxes, so a careful buyer escrows instead. The state and county notices, with the forms and instructions, are on business broker in Illinois, and all three are why a Chicago closing runs 60 to 90 days from the letter of intent rather than 30.
The other two are the seller's. A certificate of good standing from the Illinois Secretary of State, dated within a few weeks of closing, which the buyer's attorney and the lender both ask for. And the licenses: a City of Chicago business license is issued to the licensee and does not transfer with the assets, so the buyer applies for its own and the timing has to be planned, and in the licensed trades the state or city trade license has to be held by someone on the buyer's side on day one. Which licenses that means for an HVAC, plumbing, electrical or roofing company is on selling a contracting or trades business in Chicago. Manufacturers with a building sometimes add a sixth item, an environmental site assessment, when the lender or the buyer asks for one.
What gets signed at closing?
Most Chicagoland sales under about $2 million are asset sales, so the closing set is built around the asset purchase agreement. Your attorney drafts or reviews it; we coordinate it. The set, in the order it is usually signed:
- Asset purchase agreement, with the purchase-price allocation attached.
- Bill of sale, and the assignment and assumption agreement for the contracts that transfer.
- Lease assignment with the landlord's written consent, or the buyer's new lease.
- Non-compete and non-solicitation agreement, and the transition or consulting agreement that sets your 30 to 90 days after closing.
- If there is a seller note: the promissory note, security agreement and personal guarantee, and the SBA standby agreement when an SBA loan is involved.
- Escrow or holdback agreement, where part of the price waits on a condition.
- Lien searches, payoff letters and the UCC terminations that release your lender's security interest in the assets.
- Entity resolutions authorizing the sale, and the certificate of good standing.
- The closing statement and funds-flow memorandum, which shows where every dollar goes at the wire.
- IRS Form 8594, the asset acquisition statement, signed by both sides with the same allocation and filed by each with that year's return.
Form 8594 is the one owners forget. The allocation of the price across equipment, inventory, non-compete and goodwill decides how much of your gain is ordinary income and how much is capital gain, and the buyer wants the opposite allocation you want. It is negotiated in the purchase agreement, not after closing, and it is the reason to have your CPA in the room before the letter of intent is signed. A stock sale swaps some of this list for stock certificates and an assignment of the shares, and keeps the licenses and contracts in place because the entity does not change; it is less common under $2 million because buyers prefer not to inherit the entity's history.
In what order should I assemble them, and how long does it take?
About 60 days for an owner with a bookkeeper and a CPA, spread over the people who already hold the documents. The order below puts the items that set the price first and the items with other people's signatures on them early, because landlords, lenders and the Secretary of State do not work to your calendar.
| When | What to gather | Who has it |
|---|---|---|
| Week 1 | Three years of federal returns, year-to-date P&L and balance sheet, 12 to 36 months of bank statements, the payroll register | Your CPA, your bookkeeper, your payroll provider |
| Weeks 2 to 6 | The add-back schedule with receipts; revenue by customer; the agings, the debt schedule and the inventory count | You and your bookkeeper, with your CPA checking the add-backs |
| Weeks 2 to 6 | The lease and every amendment, the landlord's position on assignment; customer and vendor contracts; equipment list, titles and leases; licenses, permits, insurance declarations and the loss run | Your attorney, your office, your insurance broker, the landlord |
| Weeks 4 to 8 | Entity documents and the ownership ledger; employee agreements and the handbook; sales-tax and payroll-tax filings; the working-capital target agreed with your CPA | Your attorney, your CPA, your payroll provider |
| Before closing | Certificate of good standing; CBS-1, the Cook County notice and, inside the city, Chicago's bulk-sales notice (the buyer usually files; you supply the information); payoff letters; the Form 8594 allocation agreed in the purchase agreement | Your attorney, the buyer's attorney, both CPAs |
The full 12-month version, with the fixes that come before the documents, is the timeline on how to prepare a business for sale. What happens once the file is built and the business is on the market is in how to sell a business in Chicago.
What happens if a document is missing?
The buyer prices the gap, and the price is always worse than the document would have cost you. An add-back without a receipt comes out of SDE, and at 2.5 times, a $20,000 add-back that fails is $50,000 off the price. A customer relationship with no contract turns into an earn-out instead of cash. A lease with no renewal option left becomes a lender problem, and a lender problem is a closing that slips a month or does not happen. Deposits that do not match reported revenue end the conversation. Sometimes the honest answer is that a document cannot be produced, and then it is better said in the first meeting than found in diligence, because a buyer who finds it prices what else might be missing. The Exit-Readiness Review is two weeks and $4,500, and the fix list it ends with is, in large part, this checklist with the gaps marked.
Diligence is not a test the buyer gives you. It is a file you either built in advance or build under a deadline, and the deadline version costs more.
Marc E. Marcus, Managing Advisor
Find out what the business would bring today, before you build the file. Free.
Revenue, industry, and where to send it. Within two business days you'll have a CPA-prepared value range and a note on which of the four document sets would matter most for a business like yours. Nothing to sign.
The documents, answered.
What documents do I need to sell my small business?
Three years of federal tax returns, the year-to-date P&L and balance sheet, 12 to 36 months of bank statements, an add-back schedule with receipts, the payroll register, revenue by customer, the lease with its options, the equipment list, contracts, licenses and insurance, the entity documents with a certificate of good standing, and at closing the purchase agreement, bill of sale, Form CBS-1 release and IRS Form 8594. About 30 items before closing and ten more at the table; the first six set the price.
What financial statements do I need to sell my business?
The last three years of federal returns, the year-to-date profit and loss and balance sheet with the prior-year period beside them, 12 to 36 months of bank statements, an add-back schedule tied to the ledger, and the accounts receivable, accounts payable and debt schedules. A buyer's accountant rebuilds the earnings from the returns and the deposits, so those two matter more than the internal P&L.
Do I need audited financial statements to sell my business?
No. Businesses under about $2 million in value sell on tax returns, internal statements and a documented add-back schedule, and the buyer's accountant does the verification. Larger buyers and their lenders often commission a quality-of-earnings review during diligence, which is an independent rebuild of the earnings rather than an audit. Reviewed or compiled statements help; an audit is rarely worth its cost to a seller at this size.
What is IRS Form 8594 and who files it?
Form 8594, the asset acquisition statement, reports how the purchase price of a business's assets was allocated across equipment, inventory, the non-compete and goodwill. Both the buyer and the seller file it with their returns for the year of the sale, and the two allocations have to match. The allocation decides how much of the seller's gain is ordinary income and how much is capital gain, so it is negotiated in the purchase agreement.
What is Illinois Form CBS-1?
The Illinois Department of Revenue's notice of sale, purchase or transfer of business assets. The buyer files it at least ten business days before closing, and the department responds with a release or with the amount of the seller's unpaid state tax it wants withheld from the price. In Cook County a separate bulk-sales notice goes to the county 45 days before the sale, and a business inside Chicago's city limits sends the city's Bulk Sales Notification Form to the Department of Finance 45 days ahead as well. The three notices are why a Chicago closing takes 60 to 90 days from the letter of intent.
Do I need a certificate of good standing to sell my business?
In practice, yes. The buyer's attorney and the SBA lender ask for a certificate of good standing from the Illinois Secretary of State, dated close to the closing, to confirm the entity exists and its annual reports are filed. It is a quick item, but an entity that has fallen out of good standing has to be reinstated first, which can take weeks, so check it early.
What documents does an SBA lender need from the seller?
Three years of federal returns and current interim statements, usually with the receivable, payable and debt schedules, because the loan is underwritten on the business's cash flow; the lease, with options, running at least as long as the loan; and, if a seller note counts toward the buyer's equity injection, the SBA standby agreement at closing, since SOP 50 10 8 requires that note to be on full standby for the life of the loan. The lender also orders an independent business valuation in most change-of-ownership loans.
How to prepare a business for sale What buyers look for Selling a business in Illinois
About forty documents. The first six decide the price.
Thirty minutes with a CPA on what the business would bring today and which items in the file would cost you at the table. Or call the office, weekdays 9 to 5.