First-ever Stop-Work Order Deconstructs Operations: Citing wage violations, the NJ Department of Labor shut down a construction site managed by a building restoration 
and rehabilitation company. The action was the first-ever taken by the department under its recently expanded authority, according to an NJDOL announcement.
Digging Deeper: Three Sons Restoration LLC was cited for allegedly failing to pay the prevailing wage, for unpaid and late wages, and for failure to keep accurate, certified payrolls. The company has appealed, and the matter has been referred to the Office of Administrative Law for a formal hearing
Here’s What Happened: On August 22, in a coordinated sweep that involved local law enforcement, NJ DOL investigators issued notices at Maurice Hawk Elementary School in West Windsor, Bayonne Fire House at Engine 6 in Bayonne, and at the company’s Union headquarters.
At a September 4 hearing, a determination was made to lift the Stop Work Order at the Bayonne location; but the order at Maurice Hawk Elementary School was affirmed and remained in effect pending the formal hearing.
The state DOL is stepping up its wage-violation efforts, according to Division of Wage and Hour Compliance Assistant Commissioner Joseph Petrecca. “With these new authorities given to us by Governor Murphy and the Legislature, this administration will continue to fight for our workers using all means necessary, especially when it comes to making sure our workers are being paid properly, and the playing field is level for our employers,” he said. Under a new law, a company may be assessed civil penalties of $5,000 per day for each day it conducts business in violation of a Stop Work Order.
Don’t get steamrolled by the state: Prevailing-wage, record-keeping and other issues can be complex. We will review your company’s unique circumstances to make sure you are in compliance with the latest developments in state and US wage-and-hour regulations. We handle many NJ and US DOL audits. We frequently work with qualified employment attorneys, if necessary in each case. Consult with your legal and accounting advisers to stay on the tight side of the fence.
Trucking Co. Hits NJ DOL Pothole Over Employee Status
Collision with the DOL A national trucking company operating in NJ had to deliver more than $1 million to the NJ Dept.
of Labor after allegedly misclassifying employee drivers as independent contractors for more than a decade.
The Package Deal Eagle Intermodal Inc. agreed to pay $1.25 million in back unemployment and disability contributions, and pledged to come into compliance with the law, the NJ DOL announced on September 12, 2019.
The Dispute began in 2006 when an audit flagged the alleged misclassification, which meant the company had not paid employer payroll contributions, including NJ Unemployment and Temporary Disability Insurance. A special exemption does exist for services performed by certain operators of large trucks. The DOL concluded that Eagle’s operations didn’t qualify for it; and that the company also failed to establish that the drivers were independent contractors, rather than employees, per NJ’s ABC Test:
- The worker’s performance is not under the control or direction of the firm, and
- The services performed are outside of the usual course of the business, and
- The worker is customarily engaged in an independently established trade, occupation, profession or business.
Gov. Phil Murphy has declared a crackdown on employee misclassification, with the NJDOL required to audit 1% of active NJ businesses. Murphy’s Task Force on Employee Misclassification says these audits have uncovered “tens of millions of dollars in employee-related taxes not paid to the state.” The task force report identified trucking, transportation, delivery services, construction, janitorial services, home care, and other labor-intensive, low-wage sectors as “industries where misclassification is widespread.”
The Safer Road Firms who want to avoid fines and penalties should consult with their legal and accounting advisors. Companies should consider issues like employee classification and overtime, and work with their advisors to keep up with the latest developments in state and federal wage and hour regulations. At Urbach & Avraham we work with many qualified employment attorneys who handle these issues. We also represent many companies at US and NJ DOL audits.
Choice of Business Entity
When you start a business, there are endless decisions to make. Among the most important is how to structure your business. Why is it so significant? 
Because the structure you choose will affect how your business is taxed and the degree to which you (and other owners) can be held personally liable. Here’s an overview of the various structures.
Sole Proprietorship
This is a popular structure for single-owner businesses. No separate business entity is formed, although the business may have a name (often referred to as a DBA, short for “doing business as”). A sole proprietorship does not limit liability, but insurance may be purchased. You report your business income and expenses on Schedule C, an attachment to your personal income tax return (Form 1040). Net earnings the business generates are subject to both self-employment taxes and income taxes. Sole proprietors may have employees but don’t take paychecks themselves.
Limited Liability Company
If you want protection for your personal assets in the event your business is sued, you might prefer a limited liability company (LLC). An LLC is a separate legal entity that can have one or more owners (called “members”). A one-member LLC is considered to be a “disregarded entity” by the IRS. Usually, income is taxed to the owners individually on Form Schedule C- Business Income (part of Form 1040), and earnings are subject to self-employment taxes. Note: It’s not unusual for lenders to require a small LLC’s owners to personally guarantee any business loans.
An LLC can make an election to be taxed as a corporation or a partnership by filing IRS Form 8832- Entity Classification Election.
Corporation
A corporation is a separate legal entity that can transact business in its own name and files corporate income tax returns. Like an LLC, a corporation can have one or more owners (shareholders). Shareholders generally are protected from personal liability but can be held responsible for repaying any business debts they’ve personally guaranteed. If you make a “Subchapter S” election, shareholders will be taxed individually on their share of corporate income. This structure generally avoids federal income taxes at the corporate level.
Partnership
In certain respects, a partnership is similar to an LLC or an S corporation. However, partnerships must have at least one general partner who is personally liable for the partnership’s debts and obligations. Profits and losses are divided among the partners and taxed to them individually.
Summary
There is no right or wrong entity. The question is which one is correct for your company, needs and circumstances. Call us for a consultation to help you select the appropriate entity form for your business and family.
Do a Financial Review Mid-Year
Before you get involved with other things this late summer, schedule a mid-year checkup. 
No, we’re not talking about the height/weight/blood pressure kind of checkup, we’re talking about the income statement/balance sheet/cash flow kind of checkup — a review of your business’s financial operating fundamentals.
If you review your vital financial information only when year-end rolls around, you may not know there’s a problem until it’s too late. The more often you take your company’s “pulse,” the sooner you’ll be able to notice — and react to — changes in your business situation.
Check Your Vital Signs
What should you be looking at? Start with the operating fundamentals. For example, what’s the status of accounts payable? When’s the last time you ran an aging report for accounts receivable? How long are your A/R outstanding? How quickly is your inventory turning? What is your profit margin?
These numbers are critical to running your business. You can’t make accurate decisions if your figures are old. And, by keeping track of key financial ratios, you can more readily spot trends that should be addressed sooner rather than later. Your A/R should be reviewed by an appropriate attorney to verify that the language of your agreements and invoices covers you in case of slow or non-payers.
Monitor Your Budget
Next, check your spending. If overspending is a problem, creating a comprehensive budget that establishes realistic guidelines is an effective remedy. Make sure you have a budgeted amount for every line item expense on your operating statement. Then track and compare actual spending to budgeted amounts on a regular basis.
Certain expenses should be reviewed by a specialist to reduce expenses and verify adequate services. For example, business insurance should be reviewed with an insurance agent, bank and credit card charges with your banker, telephone expense with a communications expert.
Reduce Your Debt
Avoid the temptation to take out all your profits in good years. Instead, consider reinvesting some of those earnings in the business. Using retained earnings instead of debt to capitalize your business saves money — and provides a safety net that will be there to help you through periods of lackluster sales or unexpected expenses. Review your cash flow and investments with your investment adviser. A healthy debt-to-equity ratio will also look great when it’s time to borrow money or sell your business.
See a Specialist
Helping owners build and maintain healthy businesses is our specialty. Let’s schedule that mid-year review of your company’s finances soon.
To learn more about financial reviews give us a call today. In addition, we work with many competent insurance agents, investment advisers and collection attorneys who can review your operations.
Executor of Estate? Use our Executor Checklist as your Road Map
The responsibilities of an Executor aren’t limited to deciding who gets which assets – it also means identifying all the decedent’s assets, and ensuring that the proper paperwork is filed with the
IRS, the State and other agencies.To help you through this overwhelming time, Urbach & Avraham, CPAs has prepared an Executor Checklist that outlines the issues that an executor needs to consider.
Click here to access the: Executor Checklist
The checklist is a roadmap of tasks, from probating the will, to filing a final Income Tax return and other required estate filings, to dealing with beneficiaries and distributing the assets. It’s loaded with tips on how to locate all assets, save various taxes and efficiently manage the estate administration.
This handy checklist is packed with reminders about technical questions to ask your CPA, legal or other financial advisor. We work with many qualified estate attorneys to seamlessly coordinate your situation.
Finally, the Urbach & Avraham Executor Checklist highlights the complexities presented when a family owned business is involved. Was there a buy sell agreement? Who is paying the estate tax on the business, and are funds available to pay the tax?
As an executor, you’re already coping with a lot of emotional and other issues. We’re available to help lift the financial burden by assisting you with accounting and tax matters during this difficult time.
Business Equipment – Lease or Buy?
To lease . . . or not to lease. This is an issue business owners often face. If you are weighing the pros and cons of leasing versus buying, here are some things to keep in mind.
Cost Evaluating costs is more complicated than comparing the price of leasing a piece of equipment versus its purchase price. You will also want to consider these issues:
- How soon will the equipment need to be upgraded or replaced? Highly technical or specialized equipment becomes obsolete quickly and may be a good candidate for leasing.
- How will you arrange for service and repair? Leasing arrangements often include maintenance of the equipment. If you’re thinking of buying, research the equipment’s repair history as well as the cost and availability of reliable service.
- How long will you need the equipment? If your use will be short term, then leasing may be the better option.
Cash If you’ve been leasing your equipment, then your costs have been predictable. Purchasing equipment can substantially alter your cash flow. Be sure you consider how purchasing your equipment might affect your business’ finances.
- Can you save money by buying or leasing equipment? If — and when — cash savings will be realized is an important factor for you to weigh.
- Do you have the cash available to purchase the equipment? If you use cash for a down payment, you may have less cash for operating and other business expenses.
- How will financing your equipment purchases affect your ability to get credit for other things? If you anticipate having future credit needs, you may want to avoid adding equipment loans to your current debt load.
If you’re weighing leasing versus buying, give us a call. We can help you look at how the various options will play out.