Who actually owns the code if I'm buying a small software company?

This is one of the most important things to nail down before buying a software company, because ownership of the code isn't automatic just because the company sells the product built on it. Software created by an employee acting within the scope of their job generally belongs to the employer by default, but code written by a founder before incorporation, by a contractor, by a co-founder who later left, or with contributions from an open-source community can all sit outside that default rule unless it was properly assigned in writing.

Due diligence for a software company needs to trace the chain of ownership for every material piece of the codebase back to a signed assignment or licence, not just assume the seller "owns everything" because it's selling the business. Gaps are common in early-stage companies where paperwork lagged behind development, and a missing assignment from even one contributor can cloud title to a meaningful chunk of the product.

In a share sale, the corporation's IP position carries forward as-is, gaps included; in an asset sale, the purchase agreement should specifically identify and assign the IP being acquired, with representations and indemnities covering anything that turns out to be missing.