Unclaimed property should be reported and paid to the State. There are over 100 types of property that may become unclaimed. Generally, unclaimed property consists of bank accounts, wages, refunds, utility deposits, insurance policy proceeds, stocks, bonds, contents of safe deposit boxes, etc. that have been abandoned. The reporting form is ASD-159. The State says a holder who fails to report, pay or deliver property within the time prescribed by law, or fails to perform duties required by this law, such as due diligence, will be subject to all penalties under G.S. 116B-77. For more information go to the State Treasurer's website at www.nctreasurer.com and link to the "Unclaimed Property" page.
Owners often fail to carry adequate personal liability insurance ("umbrella insurance"). With privately owned companies, it is critical to have adequate insurance for each company owner. The owners are vulnerable to all kinds of lawsuits, and defending against such suits is extremely distracting and costly. Umbrella insurance extends your personal liability coverage for judgments for physical injury, libel, mental anguish or other causes. Damage awards often exceed $1,000,000 even when the incident was beyond control of the person sued. We suggest an umbrella policy for at least $2-5 million. This type of insurance is inexpensive and can be obtained from your insurance agent.
If you do business, have property or personnel in another state, you may need to file income tax returns there. States are becoming more aggressive in finding those businesses with a nexus and charging back taxes, penalties and interest for failure to file. The nexus rules for sales tax differ from those for income taxes.
Therefore, you may be required to collect sales tax in a state even if you are not required to file an income tax return in that state. Having a sales agent may be all a state needs to create nexus. Therefore, if you are doing business in more than one state, or expect to, give us a call to discuss your income and/or sales tax filing requirements.
Make sure you have reliable backups of your business data and the licensing information on any software you use. It is best if your backups are kept in a secure offsite location. Online backups can supplement your normal backups and can provide extra security from disasters in your local area.
If you plan to sell your business in the foreseeable future, begin preparing for a business appraisal as soon as possible. (Ideally, three years before the sale.) Suggestions to increase the appraised value:
- Cut costs - Instead of aiming to reduce your taxes, focus on maximizing profits. Trim unnecessary costs like expensive leased cars, travel with only a partial business purpose, costly entertainment, business memberships, etc. Reduce nonessential employees, even family members.
- Clean up your books - Write off excess inventory or fixed assets that are no longer used.
- Once you are shopping the business, offer to remain onboard for a few years after the sale to maintain relationships with key customers. When you decide to market the business, the appraisal can be updated.
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