Questions

Trying to understand what we are responsible for tax wise and legally...

We sold a business over a year ago. The terms allowed a small upfront payment, and the remainder in monthly payments over the course of three years. We also retained a small percentage of the company In our contract it stated that all accumulated debts, payroll, taxes, liabilities prior to finalized sale day would be paid in 30 days by us. The situation: When we sold the business we fully thought all bills / taxes were up to date. Turns out we messed up a fair amount of withholdings and such from the last three years. Some things got filed, others didn't. A lot of this popped up a few months after the new owners took control. The Buyers agreed to hold our monthly payments and just pay what was owed in terms of back taxes. Once things were caught up they agreed to resume payments. It's been about nine months since we received a payment, and they still claim they do not know what has and hasn't been paid. The business never made that much money (revenue did not exceed 6 figures), so our thoughts are there really isn't that much that could be outstanding. Since then the new owners also closed the holding company at the end of the first year they owned it. They didn't notify us, give us an end of year report or let us even know they were thinking about closing the holding company and just using the DBA under a new company. We actually didn't receive one report since they took over. Now they are saying we own absolutely none of the company and are not entitled to even knowing the end of last years business. I understand that with the 30 day clause in the contract we probably are not entitled to monthly payments, but just wondering how that fits with the rest of what is in the contract? Any help / advice / ideas would be greatly appreciated! We know the business isn't worth much, and aren't trying to get in some legal war with the new owners. Just trying to figure out how this all plays out legally and tax wise. Thanks!

3answers

One would need to review the sale agreement to provide you with any sound advice. If properly drafted in first place (ie protecting your right to future payments) then there should be some contractual tools available for you in the agreement.


Answered 5 years ago

Let me tell you what you need to do. Let me give you the magic pill if you will.
Always be reasonable and be honest with yourself. The question to ask yourself is, "Is this worth paying an attorney to settle?" If the answer is yes, then hire an attorney. If the answer is no, maybe you are better off moving along to other projects. Time is valuable and the stress involved in a lawsuit can be harmful both financially and physically.
I do notice that you say, the other party agreed to this or that and in my experience most people can't remember that they agreed to take out the trash unless you put it in writing.
Best of Luck,
Michael T. Irvin
michaelirvin.net
My books are available exclusively through Amazon Books. Check out my book "Copywriting Blackbook of Secrets"
Copywriting, Startups, Internet Entrepreneur, Online Marketing, Making Money

Best Of Luck,
Copywriting, Startups, Internet Entrepreneur, Online Marketing, Making Money


Answered 5 years ago

This is a convoluted problem. I would have to read the contract to see what was outlined and speak with a CPA to determine tax liability. Generally you can close a company with the state and fed and pay pennies on the dollar by declaring bankruptcy if you are looking to get out of it altogether.


Answered 5 years ago

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