Checklist for selling a business: how to prepare it for sale

Why prepare a business for sale?

You will probably sell a business once. If your buyer uses a lender or an accountant, they will usually check the same few things. Those are the five things below.

If your buyer borrows with a loan backed by the US Small Business Administration (SBA), such as the 7(a), its main program, the lender's checks are written down. It generally has to get IRS transcripts (the IRS's own record of what you filed) and check them against the financial statements. In a purchase it must also verify the seller's financial data (the SBA's lender rules, SOP 50 10 8.1).

Brokers say many sellers start late. In the Market Pulse survey for the second quarter of 2026, published by the International Business Brokers Association (IBBA) and M&A Source, trade groups for people who sell companies, brokers and advisors reported that, depending on the size of the business, between 60% and 90% of sellers had done less than a year of exit planning (planning how to leave the business) or none at all. Exit planning is wider than preparing a business, so treat that as a sign, not a measure.

Checklist for selling a business: what to prepare

1. Financial records a buyer can verify

Your books were prepared for tax reporting, not for a sale. A buyer needs a clear view of what the business earns for its owner. Recasting presents the same records in the way buyers and lenders assess them.

• Three years of profit-and-loss statements, balance sheets and business tax returns, in one folder (SBA 7(a) lenders analyze an acquired business on its three most recent years)
• Statements that agree with the tax returns, or a written explanation where they don't
• A list of every personal, family and one-off expense in the books, with the document that proves each one (add-backs are costs a new owner would not have to pay; see what buyers accept)
• A calculation of what the business really earns for its owner, often called seller's discretionary earnings (SDE)
• Ask your CPA whether to stop running personal expenses through the business before you sell, and what that would do to your tax bill

2. A business that runs without you

• A named person who can run things day to day
• Your ten largest customers know someone at the business other than you
• The tasks only you can do, written down
• A real two-week absence, and a list of what went wrong

More on this in how to make your business run without you.

3. Customers a buyer can count on

• Sales by customer for three years, in one spreadsheet
• The share of revenue from your largest customer, and your largest five
• The share of last year's revenue that came from customers who also bought the year before
• Contracts or service agreements for your biggest and most regular customers

See customer concentration.

4. Operations and paperwork that transfer

• A lease that can be assigned to a new owner, with enough time left (or renewal options) for a buyer to rely on
• Licenses and permits current and transferable, insurance in force
• Key supplier and customer contracts checked for change-of-ownership clauses
• An equipment list with age and condition
• Employee roles, pay and any agreements, documented

5. A story and a price with evidence

• One page on what the business does, why customers choose it and why it earns what it earns
• Three realistic ways a new owner could grow it
• A price based on recast earnings and on what similar businesses have actually sold for (see what is my business worth). Brokers typically pull those sale prices from transaction databases such as BIZCOMPS and DealStats, which are not free to browse.

If your buyer uses an SBA 7(a) loan and the business price is above $350,000, the lender generally has to get a business valuation prepared for the lender, not for you or the buyer. If the price is above the valuation, the difference must be made up by equity, meaning money put in other than the lender's loan. In some cases a seller note on full standby counts as equity: that is a loan from you to the buyer with no payments while the SBA loan runs (SBA lender rules, SOP 50 10 8.1).

How long does preparation take?

These are planning assumptions, not survey figures or averages. Your timing depends on how tidy your records are and how fast your accountant and landlord respond.

What	Rough estimate
Gathering and organizing financial records	2 to 6 weeks
Documenting add-backs and recasting three years of earnings	3 to 6 weeks
Customer analysis	1 to 2 weeks
Checking the lease, licenses and contracts	2 to 4 weeks, longer if the landlord is slow
Reducing dependence on the owner	About 12 months, sometimes more

The paperwork takes weeks to a few months, and some jobs overlap. Changing how the business runs is slow. That is the reason to start early, even if a sale is a couple of years away (see exit planning). The sale itself takes its own time: see how long it takes to sell a small business.

Why talk to your CPA and lawyer before you list?

Do it while you are still preparing, not once an offer arrives. How a sale is taxed depends on how it is structured. When a business's assets are sold, the IRS generally treats each asset as sold separately, and the kind of asset (inventory, equipment, real estate) affects how the gain is taxed (IRS Publication 544). So it matters whether a buyer is buying the assets or the company itself: see asset sale vs stock sale. Here is what to take to each advisor:

Ask your CPA	Ask your lawyer
How a sale would generally be taxed, and whether the structure changes that	Whether your lease can be assigned, and what the landlord must approve
Whether stopping personal expenses through the business changes your tax bill, and by how much	Whether any license, permit or key contract ends or needs consent when ownership changes
Why your statements and tax returns differ, if they do	What a buyer will ask you to sign, and how the business is set up legally

Do you need a broker to sell?

Not necessarily. A broker finds and screens buyers and runs the process, usually for a fee paid at closing. Plenty of owners sell on their own, for example to someone they already know. Selling by owner or with a broker compares the fees and trade-offs. Preparation matters either way: buyers ask for the same records whoever sells, and if the buyer borrows, the lender checks them too.

What to do first

Start with the numbers: the other decisions depend on them. Until you know what the business really earns, you cannot know what it is worth or which fixes are worth making. Begin handing day-to-day work to someone else at the same time, because that is the slowest job.

A practical first step: put each year's financial statements next to that year's tax return, and write down every difference and the reason for it. Then book an hour with your CPA. When that folder is ready, how to sell a small business shows the steps that follow.

Keep reading

• How to sell a small business: the steps, in order
• Documents needed to sell a business: the due diligence list
• What is seller's discretionary earnings (SDE)? How to calculate it

This guide is general information, not tax, legal or valuation advice. Every business is different: talk to your accountant, lawyer and broker about yours.