Yes, you must report the sale.
When a business is sold, even a service business, there are assets sold. Included in the sale, there may be cash, cash equivalents, inventory, assets used in the business, and intangibles. The sales price must be allocated by the seller and buyer to the various assets.
The type of gain reported is split between capital gain (short and long) and ordinary income, depending on the asset sold, if depreciation is recaptured, etc.
Here are some links to get you started. Scroll through and down to the end as more links may appear.
https://www.irs.gov/businesses/small-businesses-self-employed/sale-of-a-business
https://www.irs.gov/forms-pubs/about-form-4797
**Disclaimer: Effort has been made to offer correct information; but due to the discussion forum limitations, the poster disclaims any legal responsibility for the accuracy of the poster's response**
