A sole corporation is a type of business that has only one shareholder. The corporation is a legal entity distinct from the owner, but the shareholder exerts complete control over the business. The benefit of a sole corporation is that since it is a separate legal entity, the shareholder is not personally responsible for the business’s liabilities. As a separate legal entity, a corporation can own and transfer property just like a person can. In many ways the process mirrors how an individual would transfer property, although there are some minor differences. Also, the process of property transfer may vary by state.
Review and comply with the corporation’s bylaws regarding how to authorize a corporate property transfer. While you may think that since there is only one owner there is less need to maintain corporate formalities, the opposite is actually true. If the sole owner does not strictly comply with corporate rules that clearly establish a difference between the corporation and himself, he could lose the liability protection that a corporation provides.
Draft a sales contract. The sales contract must contain all of the important elements of the transaction. It must identify the purchaser as well as the corporation as the seller. The contract should describe the property that is being exchanged and provide the purchasing price. Include other conditions relevant to the transaction as well, such as whether the buyer is assuming any liens or mortgages on the property.
Prepare any other documentation that may be required to transfer the property. Some property, such as real estate, may require additional documentation. For example, the transfer of real estate requires the preparation of a land deed. The sale of a car may require preparing documents to submit to the secretary of state. Check with your state’s secretary of state and your county’s recorder to determine if the property transaction will require more than just a sales contract.
Execute the sales contract. Have the designated representative of the corporation sign on its behalf. Have the purchaser sign the contract as well. Exchange the property for the cash. Make sure that the appropriate documentation goes to the right person. For example, make sure that the purchaser obtains the deed after the sale if the corporation sells real estate.
Record the transaction with the appropriate state authorities. Some property, such as machinery or furniture, generally does not require registration with the state. Other property, such as real estate and vehicles, does require state registration. Check with your state’s secretary of state and your county’s recorder to determine if the property transaction will require you to register the asset with the state.