Shared Employee Costs After Selling One Company

Rebuild the service and payroll arrangements from the closing date. Historical allocations may no longer describe the businesses, and transitional services should match the executed sale agreements.

A business-owner scenario

An owner sells a distribution company but retains an administrative company whose employees handle both businesses. The buyer requests six months of accounting support. Continuing old allocations without a transition agreement can leave compensation, service revenue and responsibilities unclear.

Illustrative scenario, not a client result.

Work through the transaction

Identify employees and services retained by each party.
Separate historical costs from post-closing services.
Reconcile transition fees with payroll and vendor costs.

The mistake that changes the result

A sale price that assumed support may not answer how those services should be invoiced or reported after closing.

Records that resolve the question

Purchase agreement.
Transition-services agreement.
Employee roster.
Monthly cost and invoice detail.

The decision to document

Ask counsel and the advisor to connect the service schedule, pricing and return reporting. Agree on a cutoff and final reconciliation so temporary support does not become an undocumented permanent arrangement.

Which fact changes the answer?

A fixed transition fee may not cover an expanding service request. Track hours and deliverables against the agreed scope. That record supports billing and helps distinguish post-sale operations from amounts already included in purchase consideration.

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Sources and scope

General educational information prepared with AI assistance. No individual professional review is represented. Apply the relevant tax-year rules to the actual records. Editorial policy · AI disclosure.

I sold one company but kept the shared employees. How should costs change?