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John, Attorney
Category: Business Law
Satisfied Customers: 5732
Experience:  Licensed and practicing attorney helping businesses achieve their legal and practical goals.
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I had recently sold an IT business and stepped in as

Customer Question

I had recently sold an IT business and stepped in as Director of IT for the company who purchased me. The company was purchased on 09/01/14. Due to some invoicing issues prior to the sale of the company, I found a number of clients who owed me money and I billed them through my old company. I still hold a federal tax ID for this company. The companies that I billed were under a managed service contract with me when the work was completed prior to the sale of the business. I made my clients were aware of the outstanding bills and the invoices where paid directly to me through my old merchant credit card account. Am I committing a crime by billing my previous clients even though the work was completed before the sale of the business and agreed to by my existing customers? I didn't find it necessary to let the current company I work for know and they are threatening me with Police action for theft. Am I at fault for billing time and materials that I recently found records of?
Submitted: 2 years ago.
Category: Business Law
Expert:  John replied 2 years ago.

The answer to this depends on how the sale was structured. Namely whether you sold the business receivables as part of the deal. Most small business deals aren't structured that way, so I assume you did not sell the receivables and assumed whatever debt you had in the company as well and sold it "free and clear". It is not a criminal matter in any event because it has to do with contract interpretation - it's a civil matter. I would have to believe you don't have civil liability either. I believe this answers your question. However, if you need clarification or have follow-up questions regarding this matter, I will be happy to continue our conversation – simply reply to this answer. If you are otherwise satisfied with my response, please leave a positive rating as it is the only way I am able to get credit for my answers. Thank you, ***** ***** wish you all the best with this matter.

Customer: replied 2 years ago.
When they purchased the company, I had a few blocks of time that were not completely used and they took liability for the $3000.00 or so worth of open invoice time. The time and materials I found were at the end of the year when I was filing my taxes and realized I didn't bill 1 client in particular for several thousand dollars in parts and labor they had used prior to the sale of the business. Once I gathered all the time and materials, I created invoices in my old system and billed them for the outstanding balances. I probably should have explained my findings to my current employer (the company who purchased my business) but I knew they would want a piece of the funds and these were monies that I earned months before the sale of the business. Like I stated, I let the customer know that I had come across unpaid invoices and provided them with an invoice and listing of all services provided. The owner of the company continues to threaten to call the police and have me arrested on theft or fraud charges. I just provided them with every credit card receipt since 9/1/2014 through today along with all the paid invoices. I just want to make sure I'm not going to get into any trouble. My clients were provided with a receipt after every billing and an explanation of services performed and the dates and time. All of which they have no issues with.
Expert:  John replied 2 years ago.
if I understand you correctly there was no agreement on receivables but they paid you for some unbooked time you had. If there was no agreement on receivables they still belong to you. You cannot get in trouble for this. Maybe they'll call the cops and maybe the cops talk to you, but it is a civil matter, no prosecutor would take this up on a charge because at most there is a civil dispute as to who the receivables belong to. Theft is knowingly taking something that you know does not belong to you....this isn't even close to that.
Customer: replied 2 years ago.
No, they never paid me for the unused time. I had already billed my clients for the blocks of time. There was most likely a total of 20+ hours of remaining hours between all my clients (maybe 7 -8 clients in total) with blocks of time that still had hours remaining on them and those have all been utilized long ago. The hours and materials I billed were after the sale of the company when I found the un-billed hours in a spreadsheet and when I found errors when concerting my QuickBooks Accounting Software to an Online Version (which I lost information that I was able to obtain through other records). I just want to make sure I have nothing to worry about.
Expert:  John replied 2 years ago.
I see. There's nothing to worry about. Bot***** *****ne you never came to an agreement over past-due receivables. They assumed responsibility for these unused blocks (which aren't receivables but unrelated parables essentially) but nothing else. If there were something in your sale agreement like "they get all receivables now due and owing...then I'd be concerned...but that's not the case.
Expert:  John replied 2 years ago.
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