An employee quit and has file paperwork to get back pay. I am selling the business so who is responsible for paying the debt

It depends in part upon how the purchase is structured and how your business is set up. Although it's complicated, the big picture is that if you sell your entire business to the buyer, then the new buyer will have the liability. If instead you sell only the assets of the business, then the new buyer will not have the liability. There are exceptions to this, and you will want to consult with a lawyer who does these kinds of deals for small businesses. I would think that you will have leverage against her as a result of her taking money from you. You have to be careful to use this leverage in a legal way.

In addition, you will want to talk to a lawyer who is familiar with whether you really have to pay the back pay, as well as (heaven forbid!) additional penalties owed as a result of the delay. You may have an argument that you don't need to pay some or all of the back pay, depending on how much the former employee took from you or otherwise hurt your business.

Our firm is experienced in both these areas.

This answer does not constitute legal advice. I am admitted in the State of Arizona only. This advice is based on general principles of law that may or may not relate to your specific situation. Facts and laws change and these possible changes will affect the advice provided here. You should not rely on this advice alone, and nothing in these communications creates an attorney-client relationship.

She could come after either or both of you. You can put language into the contract for the sale of your business specifying whether you will be liable for such things or the new owner will.