How to sell your business without a broker

Selling a company can feel like moving out of a house you built with your own hands. There are rooms full of equipment, shelves of inventory, and plenty of hard-to-see value in your brand and customer relationships. 

Somewhere in that mix, sales tax sometimes shows up, and sometimes it does not. This guide explains where sales tax applies in a business sale, who typically pays it, and how to avoid last-minute surprises, allowing you to maintain momentum through the closing process.

How Sales Tax Shows Up in a Business Sale

Before we discuss who pays, it's helpful to understand what can be taxed during a sale. In most states, sales tax applies to the transfer of tangible personal property, such as equipment, furniture, and inventory, while intangible assets, like goodwill and trademarks, are not usually taxable. That mix means an asset sale can include both taxable and non-taxable items, which is why clarity on the asset list is crucial early on.

In plain terms, if your deal is an asset sale, states often expect sales or use tax on the tangible pieces unless an exemption applies. A long-standing overview explains the pattern well, noting that tangible personal property is typically taxable, while intangibles are not. This is why many asset deals carry at least some sales tax exposure.

The practical approach is to create a detailed schedule of assets during diligence and identify which categories could trigger sales tax. That step makes every downstream decision, from pricing to closing mechanics, more predictable.

Who Usually Pays Sales Tax, Buyer or Seller?

In everyday retail, the buyer pays sales tax at checkout. In a business sale, the default is similar: the buyer typically bears sales or use tax on any taxable assets, collected by the seller if the state requires collection at closing or self-assessed by the buyer as use tax after closing. Parties can shift responsibility in the purchase agreement; however, states still hold one party or the other accountable to remit.

Exemptions also matter. When a buyer presents a valid resale certificate for inventory they intend to resell, that portion is typically exempt from sales tax. State agencies publish specific guidance, and the details vary, but the core concept is consistent: Qualifying resale purchases are tax-exempt when the certificate is accepted in good faith.

Because state rules determine responsibility and exemptions, it is advisable to specify who is responsible for which tax in the purchase agreement and then mirror those responsibilities in the closing instructions to your escrow agent or attorney.

Asset Sale Versus Stock Sale: Why the Structure Changes the Answer

Every buyer and seller must choose a structure, typically an asset sale or a stock sale. In an asset sale, you sell identified assets and, in some cases, selected liabilities. 

In a stock sale, the buyer acquires the ownership interests of the entity itself. That difference drives tax treatment.

States tend to look for sales or use tax only when tangible property changes hands in an asset sale. In a stock sale, the entity continues to own its assets; the owner merely changes, so sales tax on those assets generally does not apply. 

Separate tax consequences still exist at the federal and state levels, which is why structure is a joint strategic decision, not just a formality. For a basic primer on how structures differ, see plain-English explanations contrasting asset and stock sales.

The takeaway is simple: Structure shapes sales tax exposure. That is one reason many small deals close as asset sales with clear allocations and, when needed, targeted exemptions for inventory.

Bulk Sale Notices and Successor Liability, the Quiet Risks

Several states require a “bulk sale” notification when a business transfers a substantial part of its assets outside ordinary operations. The goal is to prevent unpaid sales or use taxes, as well as other debts, from slipping through the cracks. 

If the buyer fails to follow the notice process, the state can sometimes pursue the buyer for the seller’s unpaid sales tax. New York’s Department of Taxation and Finance clearly outlines these obligations, making it a useful example of how the rules are framed.

Other jurisdictions have similar concepts, often with different timelines and forms. When in doubt, ask counsel to confirm the state’s bulk sale steps. Compliance protects both parties from successor liability that can surface after the celebration.

A Short Checklist to Prevent Sales Tax Surprises

It is easier to pre-empt confusion than to unwind it later. 

Use this quick checklist as you finalize terms:

• List all assets and classify each as tangible or intangible, so you can isolate potential sales tax items

• Decide who will remit any sales or use tax on tangible property and document that choice in the purchase agreement

• Confirm any exemptions, such as inventory covered by a resale certificate, and collect the right certificate forms

• Check whether the state requires bulk sale notices and build those steps into the closing timeline

Close the loop by aligning these answers with your closing funds flow and escrow instructions, so tax does not become a day-of-closing fire drill. Guidance from compliance resources highlights how tangible personal property and exemptions influence outcomes, which is precisely what this list addresses upfront.

How Purchase Price Allocation Interacts With Sales Tax

Beyond “who pays,” purchase price allocation affects which assets are even on the sales-tax radar. If more value is allocated to equipment and inventory, you may see greater sales tax exposure in an asset sale. 

If value is concentrated in goodwill, there may be little or no sales tax; however, income tax outcomes also change. Allocation is both a negotiation and a documentation exercise, so it is worth getting right the first time.

Because allocation also feeds your valuation logic, this is an area where a structured valuation can help you defend the numbers and avoid ad-hoc choices that create tax friction later. Baton’s valuation resources provide that grounding, keeping the conversation anchored in market reality, not guesswork.

Refer to the overview on 'How to Value a Company' and the step-by-step 'How to Value a Business' guide for a deeper look at methods, drivers, and practical ranges.

Where a Resale Certificate Fits, and When It Does Not

Inventory is the classic example. If a buyer intends to resell those items in the ordinary course of business, a properly completed resale certificate typically exempts that purchase from sales tax. 

The details are state-specific, such as which form number applies and how “good faith” acceptance is defined; however, the principle remains consistent nationwide. State and practitioner resources make that point and remind buyers that misuse of certificates can trigger penalties.

If your deal includes both inventory and equipment, you may see the inventory excluded via a resale certificate, while the equipment remains taxable. That split is normal. Plan the funds flow so the taxable portion is collected or self-assessed correctly.

Pricing, Timing, and the Path to a Smoother Close

Sales tax is only one variable in the larger journey from listing to close. Two actions reduce friction across the board. 

First, get an objective valuation so you can separate emotion from price and understand how buyers will perceive your mix of tangible and intangible assets. 

Second, work from a modern, centralized workflow that helps you prepare materials once and keep everything visible to serious buyers.

If you are early in the process, get a no-cost valuation with Baton’s Business Valuation Calculator, then explore ‘How to Sell Your Business’ with a clear marketing plan and verified data. Those two steps give you a baseline and a path, and they make the sales-tax piece a small part of a larger, well-managed exit.

A Smarter Way to Close, With Fewer Tax Surprises

The best exits remove steps rather than add them. Clarify which parts of your deal are taxable, document who pays and how exemptions apply, and fit any bulk sale notices into your closing timeline. 

Then keep buyers engaged by pricing to the market and sharing clean, verifiable information. When the numbers are clear, small details like sales tax land smoothly, and you walk away with certainty about the deal you earned.

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