Advice and Counsel for the San Diego Business Community
Janathan L. Allen & Richard Barron of Allen Barron, Inc.
Today’s business environment is more competitive and complex than ever before. California is
home to some of the most progressive business laws and regulatory compliance in the nation. The global nature of today’s business economy brings additional challenges as local business attempt to expand outside of the US, and international businesses seek access to American markets.
- life cycle of a San Diego business requires expert timely advice from trusted advisors from start-up, through growth and acquisition phases as well as the ultimate sale or disposition of your company.
Regulatory compliance and corporate governance issues require constant vigilance and regular updates to corporate documents, shareholder agreements, operating agreements and by-laws.
The owners, controlling shareholders and executives of any San Diego company or corporation must ensure that every employee and agent of the company is operating within the policies and procedures of your business, while adhering to local, state and federal laws and ethical business practices. Business owners often require assistance to establish guidelines and hiring parameters for the Board of Directors, company executives and management and every level of operational employee.
Interestingly, the principles that govern a successful multi-national conglomerate can be applied to the smallest local business. The IRS and California’s tax and regulatory agencies are focused upon California businesses and the nature of their employees and contract workers.
For example, recent changes in the determination of whether a worker is an independent contractor or employee have substantially changed. The old model of control over scheduling and the provision of tools has been replaced by a more sophisticated financial analysis.
The US Department of Labor, IRS, California Franchise Tax Board (FTB) and the Employment Development Department (EDD) are all auditing business seeking 1099 workers. The EDD conducts tri-annual audits (every three years) of all California businesses and Corporations, and one of the first questions San Diego and California business owners will face is “Do you have any 1099 workers?”
A recent Supreme Court of the United States decision has resulted in new guidelines for determining the status of an independent contractor or employee. The financial relationship between the parties is a primary consideration. If your independent contractors earn more than 60% of their income from your business you will probably face misclassification challenges from all agencies.
Independent contractors should have their own business entity, funded through their own investment. The nature of the work performed should require specialized expertise, training, knowledge or experience. Independent contractors should have control over the ability to set pricing and affect profit or loss for their own businesses. The duration of the relationship will also be examined, and when that relationship exceeds 6 months red flags are raised by investigating agencies.
This recent development alone can lead to a California civil misclassification penalty of up to $25,000 per worker as well as years of back payroll taxes, benefits, unpaid overtime and other expenses that often exceed $100,000 per “employee.”
FATCA has changed the nature of global business as sovereign nations and taxation authorities force disclosure from international banks and investment houses around the globe. Many of the G20 nations, as well as those in Central and South America have developed their own form of offshore account disclosure programs and tax initiatives.
Structuring your companies to leverage global manufacturing, production and distribution opportunities while positioning income in favorable tax sovereignties is a challenge for any San Diego business. The IRS has worked through the FATCA initiatives to make international business and the movement of money more transparent and easier for nations to track and tax. How has FATCA, transfer pricing and global taxation affected your business structure and operations?
The key to any business is to have the internal systems that capture vital information at every level of production, distribution, sales and employment. These systems provide the real market data and up-to-the-moment insight into changing cost structures.
Allen Barron helps our clients to develop and implement accounting and supply chain management systems that inform critical business decision making while capturing the information required to maximize profitability while minimizing tax burdens.
Today’s business owners and corporate executives and managers require insight that crosses traditional areas of expertise. The issues are simply too complex to “pigeon hole” into traditional disciplines. Each professional will have their own perspective and associated limitations including:
· Business Attorneys
· Tax Attorneys
· Accounting and Tax Preparation Professionals
· Financial Advisors
· Business Advisors
Each decision must be informed by many or all of these disciplines in order to maximize profitability while reducing overhead and taxation. Janathan Allen and Richard Barron provide CEO and CFO advisory services backed by a comprehensive palette of services across business, legal, tax and accounting offerings through Allen Barron, Incorporated.
What challenges do you face? How should you structure your business entities or family of companies to address the opportunities you seek? What are the pitfalls and challenges you will face during start-up and growth phases? What is the best strategy to acquire the assets of a competitor or to merge with or acquire a division that no longer fits into a major corporation’s strategy?
Ultimately these decisions should be informed from the outset by a simple question: What is your exit strategy? What is it that you wish to develop or produce through the formation and ownership of your business.
If you are a CEO, CFO, business owner or entrepreneur you can draw on the deep experience of Richard Barron and Janathan Allen supported by Allen Barron’s business, tax, legal and accounting experts to solve problems, resolve disputes, and position your company for maximum growth and opportunity.
Janathan Allen and Richard Barron form the nucleus of San Diego based, Allen Barron, Inc., which provides advisory services for the life of your San Diego business. Our seasoned and experienced CEO and CFO consultants have local, national and international experience running small business, mid-size companies and international publicly traded conglomerates. Visit their website here.