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Tips For Selling AFranchised Business (Part 2 of 2) By Cliff Ennico www.creators.com Now that you have the information you need from your attorney in orderto sell your franchise territory to a neighboring franchisee, here aresome of the questions you will need to ask your accountant: (1) How should the purchase price beallocated for tax purposes?nbsp;When you buy a business of any kind (franchised or otherwise), you areacquiring a lot of different assets - equipment, inventory, accountsreceivable, motor vehicles (maybe), intellectual property such aspatents or copyrights, and goodwill.nbsp; Under IRS rules, these alldepreciate at different rates, and both you and your buyer have to tellthe IRS (using IRS Form 8594, available at www.irs.gov) how much of thepurchase price was used to purchase each type of asset.nbsp; This iscalled "allocating the purchase price for tax purposes," and is bestdone by having your accountant speak directly to your buyer'saccountant and agree on how best to allocate the purchase price.nbsp;Make sure you do this before you sell the business, as people tend toforget about it afterwards.nbsp; As long as you and your buyer tellthe IRS the same story about how the purchase price will be allocated,life is beautiful.nbsp; But if you and your seller tell the IRSdifferent stories about how the purchase price was allocated, then bothof you will be audited.nbsp; Not a good thing. (2) Are all of my tax returns up todate?nbsp; Your buyer will want tosee copies of your most recent income tax, sales tax and other taxreturns, but you will have to file "bringdown" tax returns for theperiod beginning on January 1 of this year and ending on the date yousell the business.nbsp; If those returns show that your business hasdeteriorated when compared to the same period last year, there#146;s a goodchance the buyer will want to reduce the purchase price based on yourmore "up to date#148; information. (3) Will sales or other taxes be dueon the machinery, equipment andother physical assets I will be selling to the buyer?nbsp; Manystateshave a "bulk sales" law that requires the buyer to pay sales tax on thetangible assets (always the equipment and machinery, maybe theinventory, but never the goodwill) you are selling to him.nbsp; Thisis another reason why the "allocation of purchase price" (describedabove) is so important.nbsp; The more of the purchase price isallocated to tangible assets such as equipment, the more sales tax yourbuyer will have to pay when you sell the business.nbsp; Some statesalso have "personal property taxes" and "floor taxes" on specificassets that will have to be paid when you close the sale.nbsp; Eventhough it is the buyer's responsibility to pay these taxes, you andyour accountant will be asked to do whatever you can to minimize thesetax obligations as a condition to getting the deal done. (4) Will the state government requirea portion of the purchase price tobe "escrowed" for any unpaid sales taxes?nbsp; When you selltheassets of a business, the buyer is not subject to any debts,liabilities or obligations the seller has incurred except for those thebuyer assumes in writing.nbsp; The one exception to that, in manystates, is unpaid sales taxes.nbsp; If you have not filed all yoursales tax returns when they were due, or if you owe sales taxes, thestate can sue your buyer to collect these even though you sold only theassets of your business, not the business itself.nbsp; Because theexact amount of your sales tax liability will not be known 100% beforethe closing, it is customary for your attorney to hold a portion of thepurchase price in escrow until you have filed all of your sales taxreturns through the sale date, paid all your sales taxes, and receiveda "clearance certificate" from your state tax authority saying they aresatisfied and won#146;t go after your buyer. nbsp;nbsp;nbsp; You can ask your state tax authority to determine the amount to be heldin escrow or, if that is not possible, you can calculate the escrowamount as follows: take the arithmetic average of the sales taxesyou actually paid each month for the last six months, multiply thataverage by three, and escrow that amount when you sell thebusiness.nbsp; The theory is that if you made a mistake in calculatingyour sales taxes, it is statistically unlikely the state will assessyou for more than 300% of your average monthly tax liability.nbsp; Of course, if the state conducts a sales tax audit and finds out you#146;vereally fouled up and owe a lot more than that in sales taxes, theescrow amount may not be enough to pay the state everything you owe,and you will have to go out of pocket and "pay up" in order to preventthe state suing your buyer for the shortfall. Cliff Ennico ( cennico@legalcareer.com )is a syndicated columnist, author and former host of the PBS televisionseries 'Money Hunt'. This column is no substitute for legal, tax orfinancial advice, which can be furnished only by a qualifiedprofessional licensed in your state. To find out more about CliffEnnico and other Creators Syndicate writers and cartoonists, visit ourWeb page at www.creators.com or visit succeedinginyourbusiness.com .COPYRIGHT2009 CLIFFORD R. ENNICO. DISTRIBUTED BY CREATORS SYNDICATE,INC. Permission granted for use on DrLaura.com. More >>

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A Crisis of Competence By Cliff Ennico www.creators.com Does it seem to you sometimes that nobody knows how to do their jobs anymore? My Mom is 81 years old, a widow who lives about a two hour drive from where I live. My Mom is not usually a complainer, but when I called her this past Sunday she was nearly in tears due to three separate incidents that occurred within a three day period last week. Incident # 1: She received an IRS Form W-9 (request for federal tax ID number) from her bank showing an incorrect Social Security Number for her checking account. She was afraid to return the form by mail, so visited her local branch and spoke to an officer she trusted. The officer, after several unsuccessful efforts to contact the bank's tax department (she was put on hold several times listening to music, just like us customers), finally reached a human being and learned that the Social Security Number belonged to my father, who died more than a decade ago. Except that it wasn't my Dad's Social Security Number - the number was one digit off. Apparently this bank went through several acquisitions and the digit was changed somewhere along the way. Good thing my Mom didn't have any problems that would have required that number to be correct. Incident # 2: Mom received a letter from her Medicare Part D prescription drug insurer notifying her she would be dropped within 60 days unless she provided certain tax information. My Mom knew of this requirement, and had mailed the required information three weeks previously by certified mail. She had a return receipt, so the information was lost somewhere at the insurer's office. Unfortunately, Mom had not kept a duplicate copy of the form. Since she doesn't have a computer, I had to download the form from the insurer's website and overnight it to her. She then had to take a taxicab across town to her accountant's office to obtain a printout of her electronically-filed income tax return, which was required to be attached to the form. Incident # 3: Mom went to the supermarket to buy groceries. The checkout person, who was "multitasking", neglected to scan Mom's "frequent shopper" card, so discounts on some items were not recorded on the register tape. Mom complained to the clerk's supervisor, who came over to the register and began manually changing the prices on the register tape to record the discounts (apparently she didn't know how to void the transaction so the clerk could record everything again). Midway through doing this, the supervisor announced that her shift had ended. Both she and the clerk disappeared, and Mom had to wait 20 minutes for another supervisor to come over and finish the job. After 90 minutes at the checkout counter, Mom finally did get her discount, but it wasn't over yet, folks. Because Mom can't lift heavy objects, someone else has to pack her groceries and then hand them off to the supermarket's delivery staff for delivery to Mom's home. Four hours later, the supermarket delivery person arrived at Mom's home. Several items were missing, and included in Mom's delivery was a three foot tall plant that clearly belonged to someone else. Mom took a taxicab to the supermarket the next day (she can't drive anymore), lugging the heavy, odiferous plant, and insisted that the missing items be replaced. After some discussion, the supervisor (a third one) told her she couldn't do that but would refund Mom's money for the missing items. Mom took the refund, shopped for the missing items, and checked those items out at the register. Again, the clerk forgot to scan Mom's "frequent shopper" card . . . Now, no one has said it's easy being an old lady. Each incident by itself was trivial. But taken together they paint a nasty picture of a society that simply doesn't work well anymore. Despite - or maybe because of -- our overreliance on computer technology and an overeducated work force with little or no common sense (two of the three supermarket supervisors Mom dealt with were college graduates!), America is facing a crisis of competence at all levels of business. Here's my advice to the brainless morons Mom had to deal with this past week: stop rushing - slow down and take the time to think about what you are doing so you get it right the first time; lose your "attitude" -- care about your job enough to want to do it well, whatever that job is, even if that means staying five or ten minutes past the end of your shift without pay; remove computers from the customer service process - train human beings who can respond quickly, efficiently and empathetically to people's problems, and communicate with people in clear English (or Spanish); care about your customers, even if it hurts -- treat them with respect and patience as individuals, and try to place their needs above your own. After all, you will be old yourself someday . . . Cliff Ennico ( cennico@legalcareer.com )is a syndicated columnist, author and former host of the PBS televisionseries 'Money Hunt'. This column is no substitute for legal, tax orfinancial advice, which can be furnished only by a qualifiedprofessional licensed in your state. To find out more about CliffEnnico and other Creators Syndicate writers and cartoonists, visit ourWeb page at www.creators.com or visit succeedinginyourbusiness.com .COPYRIGHT 2009 CLIFFORD R. ENNICO. DISTRIBUTED BY CREATORS SYNDICATE,INC. Permission granted for use on DrLaura.com. More >>

Should You Be Usinge-Mail In Your Business? By Cliff Ennico www.creators.com nbsp;nbsp;nbsp; It may seem odd to be asking this question in2009.nbsp; After all, the Internet has been with us for about 15years, and e-mail was one of the first "killer apps" to emerge in theInternet era.nbsp; Everybody uses e-mail, for just about everything,and I'd be willing to bet there are literally trillions of e-mailsfloating around in cyberspace leaving an amazing archaeological recordof how we all lived our lives at the dawn of the Third Millennium A.D. nbsp;nbsp;nbsp; But something that happened to me recently has mademe wonder whether we should be relying so much on e-mail. nbsp;nbsp;nbsp; Earlier this year, I woke up one morning to find Icouldn't receive e-mails.nbsp; I contacted my Internet ServiceProvider (ISP) and, after several hours, was informed that one of mywebsites #150; the one my primary e-mail address is tied to - had beeninvaded by a "worm" program.nbsp; Apparently someone had deduced mypassword, and was using my address to send "please wire money to ourbank account in Lower Slobbovia" e-mails to everyone in my e-mailaddress book. nbsp;nbsp;nbsp; My ISP changed my password, and I started gettinge-mails again.nbsp; I thought that was the end of it, until several ofmy law clients complained that their e-mail messages to me were notgetting through.nbsp; They said they were receiving "bounceback"messages from their ISPs saying, in effect, that my e-mail addressdidn't exist.nbsp; Most of the frustrated clients were using one ofthe large cable companies as their ISP. nbsp;nbsp;nbsp; I called my ISP, who in turn called tech support atthe large cable company.nbsp; It seems that his e-mail server had been"blacklisted" by the cable company because of all the "scam-spam"messages that had come from my e-mail address when the "worm" programhad taken it over.nbsp; The two ISPs exchanged a few numbers, theserver was removed from the cable company's "blacklist", and I wasassured the problem was solved. nbsp;nbsp;nbsp; Except that I kept receiving calls from frustratedclients, using other ISPs, saying that my e-mail address still wasn'tworking. nbsp;nbsp;nbsp; A couple of weeks ago I had to travel across countryon business, which meant accessing my e-mails from the road using myISP's "webmail" program.nbsp; When I logged into my webmail account, Iwas shocked to discover that the name on my account was that of the"scam-spam" fraudster.nbsp; Apparently my ISP neglected to change theidentity on the account when they changed my password, so that everytime I sent a message, replied to a message or forwarded a message,unbeknownst to me the fraudster's "scam-spam" message was being tackedon at the end of my legitimate message. nbsp;nbsp;nbsp; As a result, a number of large ISPs were continuingto "blacklist" my ISP's e-mail server, which explained why some clientscould not communicate with me via e-mail. nbsp;nbsp;nbsp; Needless to say, I had some choice words for myISP.nbsp; While it appears (at least for now) that there are notag-along "scam-spam" messages on my outgoing e-mail messages, I amstill occasionally getting calls from people saying their messages tomy primary e-mail address are bouncing back to them.nbsp; And I amsure a lot of people who are trying to reach me for the first time viae-mail have not been able to get through. nbsp;nbsp;nbsp; I am being told the only way I can be 100% certainthe problem has been solved would be to change my primary e-mailaddress to a different website - something I am extremely reluctant todo, as I have used my address for almost 15 years now and would have togive notice to thousands of people.nbsp; To say nothing of thehundreds of articles I have written that are posted somewhere on theWeb and which prominently feature an e-mail address that would nolonger be valid.nbsp; nbsp;nbsp;nbsp; My purpose in sharing this with you is not merely tovent my frustration.nbsp; It is to point out that, even in the year2009, there are serious and unresolved issues with e-mailcommunications.nbsp; In light of my recent experience, I am no longersure that communication via e-mail is 100% reliable, dependable, orsecure.nbsp; My faith in e-mail has been shaken to the core, and I amnot sure you should trust your sensitive business communications toit.nbsp;nbsp; nbsp;nbsp;nbsp; So if you are sending me an e-mail message inresponse to this column, please use the e-mail address below - the lasttime I checked, it was still working.nbsp; If you are using anothere-mail address for me, and I have not responded to an e-mail messageyou have sent me, you now know the reason why.nbsp; If I have made younervous about communicating via e-mail, please call me, or send me aletter. nbsp;nbsp;nbsp; And PLEASE, whatever you do, do not send any moneyto a bank account in Lower Slobbovia because you think I asked you to. Cliff Ennico ( cennico@legalcareer.com )is a syndicated columnist, author and former host of the PBS televisionseries 'Money Hunt'. This column is no substitute for legal, tax orfinancial advice, which can be furnished only by a qualifiedprofessional licensed in your state. To find out more about CliffEnnico and other Creators Syndicate writers and cartoonists, visit ourWeb page at www.creators.com or visit succeedinginyourbusiness.com .COPYRIGHT 2009 CLIFFORD R. ENNICO. DISTRIBUTED BY CREATORS SYNDICATE,INC. Permission granted for use on DrLaura.com. More >>

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