Back-Office Overview

Check out these serious liabilities we have caught for our clients!

• Unfiled and unpaid payroll withholding taxes in excess of $1,000,000
• Unfiled and unpaid sales tax withholdings in excess of $250,000
• Unfiled and unpaid personal property taxes with an undetermined value
• Unrecorded vacation liability in excess of $500,000
• Unrecorded gift card liability with an undetermined value
• Unrecorded capital costs on a balance sheet
• A lease renewal period three days from expiration
• Improperly calculated percentage rent calculations
• Human Resources lapses including undocumented workers, instances of sexual harassment and operations without an employee manual with proper sign-offs
• Terminated corporate officers and store-level managers remaining as signatories on bank accounts
• Invoices being entered improperly
• Significant tip-reporting liability
• Sales being recorded improperly
• Tax credits (FICA, Work Opportunity and Enterprise Zone) not being taken
• Improperly used asset lives being recorded (ex. five-year property being taken as 10-year property)
• Store-level offices with major security lapses (ex. employee information being left out, office doors not being locked and checkbooks being left out)

As you can see, many potential liabilities are not readily apparent. All of the above-mentioned items are serious and significant liabilities of a specific nature were uncovered. In the case of purchasing a corporate entity, many of these liabilities would have transferred. For example, payroll withholding taxes, sales taxes and personal property taxes. In the case of the unrecorded vacation liability, this caused a purchaser to lower the offer significantly as they were using a 5x multiple on trailing 12 months earnings.