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

www.AmeriLawyer.com

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!

www.AmeriLawyer.com

They are certain factors that go into determining whether one is an independent contractor or employee, and it all depends on the level of control and independence within the employment relationship. You are not an independent contractor if you perform services that can be controlled by an employer. Some questions to consider in determining whether one is an independent contractor are as follows: 1) Does the company control or have the right to control what and how the worker does their job? 2) Are the business aspects of the worker’s job controlled by the company? 3) Are there written contracts or employee type benefits? 4) Is this job the worker’s sole source of income and will the work relationship continue?

Why is employment status important for you as an employer? A worker’s employment status affects an employer’s tax liability. When a worker is an employee, employers must pay state and federal unemployment tax, social security tax and workers compensation/disability premiums. However, when a worker is an independent contractor, the hiring party is not required to make any of these payments. Should employers incorrectly define a worker as an independent contractor, they may find themselves liable for past taxes including income taxes, FICA, federal unemployment taxes, workers compensation insurance, interest and penalties.

Don’t forget to consider these important factors next time you are hiring.