Buying a business- what about employees?

It is important to find out whether the business you are buying has any part time or full time employees. If so, you will become liable as a successor employer for obligations to these employees, including salary, vacation pay, unemployment insurance premiums and worker’s compensation premiums. Because of these obligations, and the difficulty of determining the full extent of your obligations as a prospective purchaser, you may not want to retain any employees, and hire your own employees after the purchase transaction is completed. If you are buying a small business, it can be preferable to include a provision in the Agreement which requires the vendor to terminate all employees before closing.