Before you go out and buy an existing small business, you must ensure that the books and accounting are in order. You need to see balance and P & L statement, and you need to verify this information. What is Henry Kissinger and Ronald Reagan to say in foreign diplomacy and negotiation? "Trust, but verify!" And, it is my contention that this is great advice when buying a used business.
Not so long ago, I was doing a little bit of business advice. And I explained that before getting serious about buying a business customer the need to balance sheet, P & L (profit and loss) statement and the 3-year tax return. Well, it turns out the business corporation is meant by "dd" by the name of the company at the top of P & L, so the company depending on the type of corporation will have to file corporate tax returns.
However, when asked to produce these, they said they ran into difficult times, but did not file in 2007 and 2008, and had 2009 sales tax did, but that really did not entirely due By September 2010, the IRS granted extensions . Interesting thought, but then I happen to mention this issue about buying the business from the Corporation, which failed to file taxes for 2008 and 2009 this evening that the tax accountant in the Club House here.
said it could be a big problem, however, does not tolerate at all is much worse than filing, and not being able to pay, such as the IRS will set a payment structure that came to power. 2009 taxes are theoretically due until September if he'd filed an extension. However, 2007 and 2008 are the real problem.
Now then, before I go any further, I need to make a statement that the reader here CYA - I did not tax attorneys, it is not legal advice, and I recommend you to check out this interview (hearsay) and a licensed professional tax attorney experts. I am not qualified to give legal advice, never to practice law without a license, and you can not take anything to say as legal advice. Ok, so, CYA side, it is my opinion and why I think this:
You see, I've also spoken to someone at Starbucks a few weeks ago and told me the story in which a company not to file taxes, and then went bankrupt it was paid as an electrical / mechanical contractor for the building remodeling. other vendors plumber, TI fellow, drywaller, etc. and the IRS never got paid, as the company ran out of money.
Bankruptcy Court came after the electrical contractor to reimburse for services rendered to it in its entirety, and the BC Court said that the money will be divided among the remaining debts, and 18-months, the electrical contractor will receive a check, maybe 10 cents on the dollar or its content. He had to pay back the money he would have been paid. Ouch. Thus, $ 80,000 was paid back to the court that he did not pay, that the BC court could force him to pay it. Kind of like people who were paid the money back before Bernie Madoff all know that the Ponzi scheme, even though they get their money back, it is actually owed to all the other people too. Everyone loses.
Also, according to the Tax attorneys I spoke to, the assets of Corporation (in this case business for sale Inc.) could be subject to a lien from the IRS, in fact all of the assets of corporations. If the president of that company sold those assets to the buyer, it could be a false transport, and thus, even though they were in possession of the buyer and the new corporation, the buyer might have to pay - or a sentence that equipment to satisfy a lien, and guess what, They would be the business address and could not put the lock on the door - tough luck
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In addition, in this case we had a business for sale Inc. with no way to prove the balance sheet or P & L, except for 8-sheets of paper from the Quicken program. And there is no Business Broker in their right mind would continue to enter the giant red flag in front. Ok, so, in this case as a small business consultant might say - "I have no way to determine if this is so, all I can do is guess ?"
However, there is sufficient reason for not offering more for this work from the value of used equipment, and still, how does the buyer know whether the business owner or a corporation owns all of it free and clear or if they borrowed against the credit line at the bank on the property company, not to mention the back taxes owed, the corporation president says is owed. He can not have "really" made any money at that age, but assuming that it is not, he owes, and without these wages, all assets that corporations are in limbo of what my friends and acquaintances tell me.
So, this business case study is a wake-up call to anyone buying the business. And if you find yourself in a similar situation, and if they want to continue such work continues to buy, I would recommend you talk to tax specialist lawyer before you proceed. See buying business involves risk, and when such variables and uncertainties are added to the equation makes sense to seek advice on this set of circumstances. Tax attorneys usually have time on their hands to sit down to discuss things like this, after 15 April, and really, really like it takes only an hour or two to ask this question, and get the "correct" answer.