When the time comes to hand the IRS your money, it’s no secret that the byzantine tax code they have created is built for confusion over efficiency. Here are some things every entrepreneur should know about filing taxes for an LLC:

First, unlike a Corporation, an LLC is a pass-through entity – this means that the company itself will not have to pay any federal taxes at the company level. The individual members will pay taxes or any distributions they receive from the LLC. If the LLC has only one member, you will be taxed like a sole proprietorship. This means that you will figure your profits and losses on IRS Form 1040, Schedule C when you file your personal income tax return.

However, if your LLC has multiple members, you will be taxed as a partnership. Each member will report their profits on IRS Form 1040, Schedule E when they file their personal tax return. The partner’s share of profits and losses should be clearly defined on a well-drafted Operating Agreement in order to avoid conflict. In addition, the multi-member LLC must distribute a Schedule K-1 to each member in order to show that member his or her share of LLC income.

Always check with your State’s tax collector for any “franchise taxes.” These are additional state taxes imposed on LLC’s that reach a certain income threshold.

If you are a member of Spiegel & Utrera, P.A.’s General Counsel Club and you need assistance filing your LLC taxes, call (800) 734-9900 or  clubassist@amerilawyer.com for assistance. Remember, as a member of the  General Counsel Club, you receive unlimited legal, business, credit and tax  advice all year long.

Self-directed IRA’S are commonly used vehicles for investing IRA funds into assets without having to immediately pay taxes on the funds used for investments. These IRA-owned LLC‘s operate out of a business checking account with the “Manager” of the LLC (also the IRA account holder) being the authorized signer on the account. If the account holder is not extremely careful, the self-directed IRA may create major tax and legal problems. Specifically, tax-exempt status may no longer be afforded to the IRA and the entire value of the IRA may be treated as taxable to the account holder, including possible interest and penalties.

Ensuring that the account holder does not engage in, what the IRS considers, “prohibited transactions” is key to avoiding these potential issues. Generally, the self directed IRA shall not interact, or transact matters, with “disqualified persons.” Disqualified persons include, but are not limited to, the IRA account holder; the account holder’s spouse; lineal descendants, lineal ascendants, and spouses of these persons; and, business entities owned 50% or more by these people. It is important to note that any direct or indirect interaction, and even minor transactions, between the IRA and a disqualified person may result in the complete taxation of the IRA.

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Email: info@Amerilawyer.com

Avoiding payroll taxes by intentionally or unintentionally misclassifying employees as independent contractors is a costly mistake.

Most often the misclassification will be discovered during an audit or if a former worker files a complaint. Under “the twenty factor test” in Revenue Ruling 87-41, an employee is anyone who performs services for an employer if the employer can control what will be done and how it will be done. However, in an independent contractor relationship the employer has the right to control or direct only the result of the work done, and not the means and methods of accomplishing the result.

How to properly create an independent contractor relationship?

Foremost, you must have an independent contractor agreement in place. This will help define the responsibilities of the indepependent contractor to follow proper standards under the law. Next, the independent contractor should set up his own corporation or LLC. Then the independent contractor relationship is between two entities. This helps the employer prove he is not controlling methods to accomplish the result. To help understand how to create an independent contractor relationship, speak to one of our specialists at (800) 603 – 3900 or visit our website today!

The recent recession and subsequent slow recovery have steered more entrepreneurs towards franchises.

The boom in franchises means more opportunity, but not all buyers are getting an accurate picture before taking the plunge. Because there is no central regulation over franchising, disclosure statements are often used to confuse buyers into more restrictive terms. For example, franchisers are getting kickbacks for these arrangements. Furthermore, franchisees can only go to arbitration. In some cases the franchise agreements will shorten the statute of limitations meaning the franchisee cannot bring any legal action.

Despite the risks, franchising is a proven business model

Before you enter into a franchise agreement, it must be reviewed by an attorney familiar with the franchise industry. Also, buyers must have thorough due diligence done to determine whether the franchise can be successful. Buying a franchise is one of the largest investments you will ever make, so it shouldn’t be take lightly. If you already own a franchise, or you are thinking of purchasing one, then contact the Spiegel & Utrera, P.A. General Counsel Club at (800) 743-9900.

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When starting a business, among the most common methods that are thought of to raise money for the business are a business loan from a bank, credit cards, money from savings or a second mortgage on a home. The 2 ways listed below are some that may not have been considered.

1. Crowdfunding. In a crowdfunding situation, you would present the idea for your business on a crowdfunding website. The public would then decide if they would like to contribute to your business by providing money. Typically crowdfunding sites allow for people who donate to a business to receive a “reward” for investing. Kickstarter and Fundable are among the more popular crowdfunding websites.
2. Business Partner. Many companies receive money for their business from a business partner. Choosing a business partner is something that should be done with great care to ensure that the business partner’s goals are in sync with yours. It is also important to have all the proper agreements drafted such as a buy out agreement and operating agreement in place when the business is getting started. Having the agreements in place prior to any disagreements could pay off greatly down the line.

If you are a member of Spiegel & Utrera, P.A.’s General Counsel Club and have business related questions, call (800) 734-9900 or clubassist@amerilawyer.com for assistance. Remember, as a member of the  General Counsel Club, you receive unlimited legal, business, credit and tax advice all year long.

Spiegel & Utrera, P.A. is a corporate law firm with its main offices located in Miami, Florida with offices throughout the United States. As a law firm, we do more than just help you form your business entity. We stand ready to help with the maintenance of your legal business entity! We will assist you with Incorporation Service, Trademarks, Copyrights, Estate Planning, Legal Counsel, Wills,Trusts, Agreements & Leases, Corporate & Company

Many business owners have a false sense of protection from liability of business debts and taxes based on general rule of law that the corporate or LLC form of organization shields persons from personal liability. However, this is not the case when it comes to paying employment payroll taxes. Employers are required to withhold federal income taxes and social security (FICA) taxes from their employee wages and are liable for payment of these taxes to the IRS. The employer does not have to segregate withheld funds from other funds available. However, these funds are considered to be held in trust and cannot be spent for any purpose other than remittance to the government.

Failure to Withhold and Pay Employment Payroll Taxes

To facilitate the collection of unpaid trust fund taxes, persons statutorily responsible for making sure the taxes are paid are held personally liable. The IRS will seek a 100% penalty against certain individuals considered to be “responsible parties” for the payment of trust fund unpaid withholding taxes. The penalty does not apply to the employer’s portion of FICA and to federal unemployment taxes.

Who Is A Responsible Party?

In many situations it is difficult, based solely on the tax code, to determine who is the responsible person. The ultimate determination of responsible persons is often decided by the courts, which have taken a broad view. Courts have repeatedly stated the penalty should be imposed on persons who have ultimate authority to decide the priority of bill payment and who willfully pay other creditors, rather than paying the payroll taxes. For a small business, this may include signers on the corporate bank account(s), any of the officers, directors, and shareholders or members of the company.

Call us or visit our website today to learn more about Avoid Becoming Personally Liable For Business Employment Or Payroll Taxes!

800-743-9900

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How much is it worth? If you are thinking of selling your existing business, the first question you will ask yourself is; “How much is it worth?”

Unfortunately there is not only one method to value a business, there are many different approaches, and in addition there are also many variables to take into consideration. It is very likely that two people looking at the same business will come up with two different values.

There are a few methods however that are commonly used.

1. Value your business based on sales
Some industries tend to value the business based on the annual sales and use a multiplier. This method is commonly used in service industries; the multiplier will be different depending on the industry and a few factors individual factors. For example, one industry’s multiplier may be 2 times the annual sales, which would be the price you would ask for your business.

2. Value your business based on cash flow or profits
In this method the value of the company is based on the company’s estimated ability to generate profit or cash flow over a period of five years used with an agreed upon multiplier. As you can see, there may be vastly different opinions about the accuracy of the future projections but a profitable, healthy small business should sell for somewhere between 2.5 to 4.5. For example, if the annual cash flow in your business is $50,000 the selling price should be somewhere between $125,000 and $225,000.

3. Value your business based on assets
What if there is no cash flow or profits? Sometimes business owners cannot wait for the ideal point in time to sell the business, but they are forced to sell. In this case the method of valuing the assets may be a way to go. While it may be easy to value tangible assets such as machinery or vehicles, don’t forget that the business phone number, domain name or an existing lease in an attractive area may also be valuable assets.

To better understand how to sell your business, speak to one of our attorneys by calling 800-743-9900 or visit our website today!

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