Buying a Business in Virginia: Licenses, Registrations and What Transfers to the New Owner
Most Virginia licenses and registrations don't transfer to a buyer: the local business license, sales tax registration, alcohol license, contractor license, and food permit are issued to an owner, so a buyer usually applies in its own name. Some obligations do follow the business, including unpaid sales tax if you don't withhold from the price.
Quick answer: Assume the permissions stay with the seller and the obligations come with the business. Build the license applications and a tax withholding into the closing timeline before you sign.
KEY TAKEAWAYS
- Richmond's business license is issued to a licensee at an approved location, so a buyer applies for its own
- Virginia ABC says the sale of a non-corporate business ends the alcohol license and a new application is required
- A buyer who doesn't withhold from the price can be personally liable for the seller's unpaid sales tax
- By default a buyer is assigned the business's unemployment tax experience unless it opts out within 60 days
Looking at a Virginia business?
Talk to a Richmond buyer's broker or call (804) 520-7557.
A business can change hands on a Friday and be unable to legally open on Monday. The licenses stayed with the old owner.
First Choice Business Brokers Richmond helps buyers find a
business for sale in Virginia, and this guide covers the paperwork after you've found one. For the seller's side of the same closing steps, see our
full timeline for selling a business in Virginia.
What Licenses and Registrations Do You Need When You Buy a Business in Virginia?
It depends on the business, but most buyers need a local business license, a sales tax registration if the business sells taxable goods, and a permit for anything regulated, such as alcohol, food service, or contracting. Each is issued to a specific owner, so each needs a new application.
| Item | Does it transfer? | What the new owner does |
|---|---|---|
| Local business license | No. Issued to a licensee at an approved location | Apply in the buyer's name, and tell the city about the ownership change |
| Sales tax registration | No. The certificate is not transferable | Register with Virginia Tax in the buyer's name |
| Alcohol (ABC) license | No. A sale of a non-corporate business ends the license | File a new application before serving alcohol |
| Contractor license | No. Issued to the firm, and a change of legal entity voids it | Apply for a new license within 30 days of the change |
| Food establishment permit | No. Issued in the owner's name | Apply to the local health department for a new permit |
| Trade name | Must be registered | Register the name with the State Corporation Commission |
Richmond requires a business license within 30 days of opening, issues it only for the approved location, and won't issue one until all city taxes are paid (City of Richmond). Its application tells owners to notify the city if they sell the business or change the ownership in any way (City of Richmond application).
Other Virginia localities run their own license programs, so confirm with the local Commissioner of the Revenue if the business is outside the city. A city license is not a substitute for a state contractor license.
The sales tax Certificate of Registration is not transferable and is valid only for the designated dealer and place of business (23VAC10-210-290). Virginia ABC says any change in non-corporate ownership, such as the sale of the business, automatically terminates the license and a new application must be filed (Virginia ABC).
Contractor licenses are issued to firms and are not transferable, and a change in the legal entity voids the license (18VAC50-22-210). Food permits are also issued in the owner's name, so a buyer that replaces the permit holder applies for a new one, according to a
Virginia law firm's guide.
What Does Transfer to the New Owner?
Obligations move more readily than permissions, which stay with the seller. Unpaid sales tax can follow a buyer who doesn't withhold from the price, and a buyer is assigned the business's unemployment tax experience unless it opts out within 60 days.
Virginia Code § 58.1-629 says a buyer must withhold enough of the purchase price to cover the seller's unpaid sales tax until the seller produces a receipt or certificate from the Tax Commissioner, or the buyer becomes personally liable (Code of Virginia). The Tax Commissioner has ruled that a buyer of a business's stock can be liable for sales tax from the prior owner's period when it surfaces on audit (Virginia Tax ruling 20-83).
Under § 60.2-535, an acquirer is assigned the predecessor's unemployment experience record unless it notifies the Virginia Employment Commission in writing that it doesn't want it (Code of Virginia). The Commission's form sets that notice at 60 days from the acquisition (VEC form).
The deal structure matters too, since in an asset purchase a buyer generally applies for licenses in its own name, while in a stock purchase the entity and its licenses stay in place, though ownership changes may require notices (McCormick PC). A stock purchase also brings the entity's history with it.
Six things to do before closing:
- Get the seller's license and permit list. Every license, permit, and registration the business holds, with expiration dates.
- Write the tax withholding into the contract. Hold back enough of the price until the seller produces the Virginia Tax certificate.
- Apply for regulated licenses early. Alcohol and food permits have their own review periods, so plan the closing date around them.
- Decide on the unemployment record. Ask for the rate history, then decide whether to keep the experience record before the 60-day notice window closes.
- Get landlord consent. Leases and key contracts typically need the other party's approval to assign.
- Register the trade name and apply for the city license. Richmond requires trade names to be registered with the State Corporation Commission.
This article is general information, not legal or tax advice. Licensing and successor-liability rules depend on the deal structure and the locality, so check with a Virginia business attorney, a CPA, and each issuing agency.
How Do You Start Buying a Business in Richmond?
Tell a broker what kind of business you want and expect to show proof of funds or verifiable financing before a custom search begins. Then bring in a Virginia business attorney and a CPA before you sign anything, since the transfer rules depend on how the deal is structured.
What to do first:
- Define the target. Industry, income goal, and whether the business needs a regulated license such as alcohol, food service, or contracting.
- Show proof of funds. First Choice asks buyers for proof of funds or verifiable financing before a custom search begins (First Choice).
- Ask for the license list early. Request it before you make an offer, so you know which applications will gate your opening day.
- Line up advisors. A Virginia business attorney and a CPA.
- Where we are. 4110 E Parham Rd, Richmond, VA 23228. Call (804) 520-7557 or use the contact page.
Frequently Asked Questions
What licenses do I need when I buy a business in Virginia?
Most buyers need a local business license, a sales tax registration if the business sells taxable goods, and permits for anything regulated, such as alcohol, food service, or contracting. Each is issued to a specific owner, so each generally needs a new application.
Does a business license transfer to the new owner in Virginia?
Generally no. Richmond's license is issued to a licensee at an approved location, and the city asks owners to report a sale or ownership change, so a buyer applies in its own name. Other localities run their own programs, so confirm with the local Commissioner of the Revenue.
Can I keep the seller's alcohol license?
No. Virginia ABC says no license is transferable from one person or place to another, and the sale of a non-corporate business ends the license. A buyer files a new application and shouldn't serve alcohol until it's approved.
What happens to the business's unemployment tax rate?
By default the buyer is assigned the predecessor's experience record, which feeds the rate, unless it notifies the Virginia Employment Commission in writing that it doesn't want it. Ask for the rate history before you buy so the choice is informed.
Is an asset purchase or a stock purchase simpler for licenses?
In an asset purchase the buyer generally applies for its own licenses, and in a stock purchase the entity and its licenses stay in place, though ownership changes may require notices. A stock purchase also carries the entity's history, so ask your attorney which structure fits.
How do I start looking for a business in Richmond?
Contact First Choice Business Brokers Richmond at (804) 520-7557 or through the contact page, and describe the business and any licenses it would need. Expect to show proof of funds, and bring your attorney and CPA in early.
About the Author
William Griswold is a Broker with First Choice Business Brokers Richmond. He bought his first business while in college and later built a company into one of the largest stainless-steel manufacturers on the East Coast, according to his bio, and he has worked in commercial sales for Motorola, Security Link, and ADT.
Meet the team.
I bought my first business while I was still in college, and I've read a lot of license paperwork since. We work with buyers across Richmond, Glen Allen, Chesterfield, and Central Virginia from our office at 23228.
Summary and Next Step
In Virginia the permissions stay with the seller and the obligations come with the business. Apply for the licenses early, withhold against the seller's tax, and check the unemployment record before you close.
Ready to look at businesses in Virginia?
Browse available businesses or
talk to a buyer's broker at First Choice Business Brokers Richmond, 4110 E Parham Rd, Richmond, VA 23228, (804) 520-7557.
Recent articles for you
