3 Ways a Business Attorney Can Help You Navigate Tax Laws When Buying a Business

Buying an existing business may seem straightforward, but it involves many risks and variables. While you may be aware of the general requirements of a business purchase, you could be oblivious to the legal work necessary for a successful business takeover.

You can buy a company with minimal lawyer involvement, but it may be unwise since you bear most of the risk. Proper due diligence is critical, especially regarding tax matters and other legal issues. Here are a few ways an attorney can help you navigate the business acquisition process.

1. Risk Analysis and Due Diligence

It is essential to seek full disclosure when buying a business. Ideally, you should study the organization’s history through the Minnesota secretary of state business search. Try to focus on the business’s performance history, projections, transactions, statements, sales, reports, and contracts.

Most sellers will show you the positive side of the business, meaning they can downplay existing or potential issues the business may be facing. You must perform thorough due diligence with the guidance of an experienced business attorney.

Most importantly, if you overlook a crucial problem during your due diligence, you can’t hold the seller accountable or seek legal redress for misleading information and subsequent liabilities. For instance, if the seller says they have paid their taxes, they should back the claim with tax documents. However, most businesses experience some gaps in their accounting system. The attorney can draft a purchase agreement with a clause where the seller guarantees full disclosure and indemnifies you if the IRS detects tax fraud or evasion.

2. Tax Disputes

Tax disputes may include conflicts arising from an investigation, correction motion, appeal, or other taxes-related issues. Tax attorneys have the expertise to deal with all the intricacies of tax law and can represent you in court.

The attorney can also level the playground between your business and the federal or state tax authorities. While IRS audits don’t imply that you are on the wrong side of the law, you have a right to be represented by a legal expert throughout the process. If you disagree with the audit results, the tax attorney can prepare an appeal.

3. Tax Relief

If you have tax arrears that you can’t pay at once, you can negotiate a flexible repayment plan spread over time. Here, the attorney will negotiate a lower payment with the IRS to make the arrears manageable.

Similarly, the lawyer can lobby and suggest an offer in compromise with the IRS. This strategy helps you pay a portion of the outstanding debt instead of clearing the whole amount. However, this offer requires solid proof of your inability to clear the debt, and the attorney can compile the evidence to build a strong case.

Outstanding tax issues can prompt the IRS to take further action. They can garnish your income and place liens on your assets. Should any of these happen, the lawyer can defend your business and prevent losses.

Endnote

Buying a business is a complicated process with many variables, including tax and copyright issues. However, a competent attorney can perform due diligence to ensure the business complies with applicable laws.

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