Treasury Transitions In the Sale of a Corporation

Old owners often offer counsel to new owners after the purchase.

There are a number of reasons why you might sell your corporation. You may want to retire or change jobs or you may have purchased your corporation just to sell it and turn a profit. Whatever your reason, your corporation's treasury will go through a number of transitions when the new company takes over.

Personnel Transition

When you decide to sell your corporation, you must prepare your treasury personnel for the transition. According to American Express Open Forum, your corporation is ready to sell when your employees can function even when you are not there. If you have not delegated much responsibility or your financial team is not working well together, you must address these issues before the corporation's sale. Otherwise, a prospective buyer might not want to buy your business. However, you also should prepare your employees for the fact that the prospective buyer may want to bring in new treasury staff. When employees know this, they have an even greater motivation to work well and prove their worth.

Accounts and Licenses

Most businesses have accounts and licenses in their name that need to be transferred to the new owner. These accounts range from bank accounts, credit cards and business licenses to utility accounts and cable packages. According to the Small Business Administration, it is important that you cancel licenses and accounts in your name or ensure they are legally transferred to the new owner. If they aren't, you could be held liable if something goes wrong. The treasury also needs these accounts to be in the name of the new owner so it can manage the accounts without your permission.

Treasury Management

The way a corporation manages its treasury is at the discretion of the owner. Decisions a corporation's owner must make include what accounts are created, what financial software is used, how money is invested and when employees are paid. When a corporation changes owners, the new owner can change how the treasury is managed. For example, if your small printing corporation is being acquired by a nationwide conglomerate, the conglomerate likely will implement its own financial management software. However, some corporations create sales agreements that compensate the current owner for sticking around for a period of time to give the new owner advice for running the company. In this case, the current owner might show the new owner why the current treasury management model should not be changed.

Taxes

The sale of a corporation means taxes for both the buyer and seller. Buyers must now assume the corporation's taxes, while sellers must pay taxes on capital gains made by the corporation's sales. According to the IRS, the sale of the business is not seen as the sale of one asset but many assets that make up the business. Former corporation owners must assess each asset to determine whether a gain or loss has been made. These gains and losses must be reported to the IRS.

References

• Small Business Administration: Steps to Closing a Business
• Small Business Administration: Sales Agreement for Buying a Business
• Small Business Administration: Selling Your Business
• American Express Open Forum: Creating a Smooth Business Transition When You Sell Your Company
• Small Business Administration: Plan Your Exit
• National Center for Employee Ownership: ESOPs Compared to Other Strategies
• Internal Revenue Service: Sale of a Business

Resources

• Public Legal Forms: Agreement to Sell Business