As the sole LLC owner, can I pay myself all the profits I make? Can I (sole-owner and sole-employee) simply take whatever profits I make from my LLC's bank account and pay them to myself, rather than paying myself a defined salary or rate? (I'm not saying this is good business advice, and I'd keep money for taxes, but I'm wondering if I can do this.) And does this change based on whether I file as a single-member LLC, or file as an LLC but elect to be treated as a corporation? Also, does this change when I hire employees? (not founders, or partners, just employees). State: Wisconsin
The only reason you couldn't take all the profits is if your business were a C-Corp. I don't know of any reason a single-owner LLC would elect to be taxed as a C-Corp. Multi-owner LLCs and LLPs are, for federal tax purposes, either an S-Corp or a C-Corp. When possible they can and should generally elect to be taxed as an S-Corp. IRS Pub 2553 lists the criteria for S-Corp election. (Employees have nothing to do with the question.) For tax purposes partnerships, sole proprietorships, and S-Corps are "pass-through" entities that are not expected to pay a corporate tax. In effect, whether you like it or not, you do pay yourself all of the profits each fiscal year, and they are taxed accordingly.
The real question isn't whether there is a law, but whether you want to keep your job. If you want to do something that you believe will affect your company negatively, and you ask whether it's legal or not, the question alone should show you it's a bad idea. And another question is whether you can be sued, and what it will cost you even if you can win a case, and the answers to that are "yes" and "a lot".
So these are the basic rules of the tax game: The taxpayer (employee, in this case) is liable for tax on income earned by him. On occasion, the payor of the income to be received by the taxpayer is required to withhold tax on the payment, remit the withheld tax to the IRS/state/local tax authority and pay the balance over to the taxpayer. If that happens, the taxpayer is entitled to a credit against his taxes for the amount withheld by the payor. Failure by the payor to withhold the required amount of tax does NOT excuse the taxpayer from paying tax on the income he earned. So company B is right.
They have exactly zero legal grounds to withhold your last paycheck. From Code of Virginia 40.1: All employers operating a business shall establish regular pay periods and rates of pay for employees except executive personnel. All such employers shall pay salaried employees at least once each month and employees paid on an hourly rate at least once every two weeks or twice in each month, except that (i) a student who is currently enrolled in a work-study program or its equivalent administered by any secondary school, institution of higher education or trade school, and (ii) employees whose weekly wages total more than 150 percent of the average weekly wage of the Commonwealth as defined in § 65.2-500, upon agreement by each affected employee, may be paid once each month if the institution or employer so chooses. Upon termination of employment an employee shall be paid all wages or salaries due him for work performed prior thereto; such payment shall be made on or before the date on which he would have been paid for such work had his employment not been terminated. The Virginia Department of Labor and Industry unfortunately does not take claims if there is a written contract and recommends you pursue the matter in court. You may want to consult with a local labor attorney to get an idea of where to go from here, even if you plan to file in small claims court. Virginia extortion law doesn't appear to apply to withholding stolen property, but their claim that release of the last paycheck is consideration for signing the NDA may be some other civil wrong, like conversion. I do not know whether you could recover damages above the wage owed for that.
You cannot define "revenue" as profits. Indeed, you probably can't even deduct cost of goods sold. Revenue is the amount of money that a company brings in from selling goods and services (investment income is arguably more ambiguous, and loan proceeds would clearly not be revenue). In the absence of other indications, a court would probably look the generally accepted accounting practices (GAAP) to define revenue, or perhaps definitions used by the U.S. Small Business Admnistration, or dictionary definitions, in the context of a contract. Whatever "revenue" means, it almost certainly doesn't mean "profits". Revenue makes more sense than profits in any case in this circumstance. They are trying to use a measure that is hard to manipulate, easy to determine from accounting records, easy to estimate in the absence of good record keeping, and that reflects the scale of the enterprise. Revenue is a standard measure of small v. large businesses for many purposes. Profit, in contrast, can be easily manipulated (e.g. through salaries paid to insiders and related party cost of goods sold contracts). Businesses are also much more likely to publicly disclose their revenues (and hence create evidence relevant to the contract) than to disclose their profits.
Yes. A company from one member state may do business in any E.U. state so long as it complies with local law in the course of doing so. For example, a Dutch company doing business in Germany must still pay German taxes and comply with German labor laws for its German employees. But, it doesn't have to form a German subsidiary to do business in Germany.
The fact that the employer has vicarious liability for acts of its employees "within the scope of employment" does not mean the employees are not also liable for their own acts. In reality, however, the employer is more likely to have insurance for such "acts or omissions" of employees. The plaintiffs can "sue everyone in sight" and let them figure out who actually pays when they are found liable. That way, when the employee's actions are (for instance) ruled a "personal frolic" or otherwise outside the scope of the employer's liability (in tort or contract), the case doesn't get dismissed for failure to name all the proper parties. One policy goal is to place financial liability as close as possible to the person most likely to have been able to avoid the harm, thus discouraging such risks, without placing the entire burden on individuals employed in hazardous occupations and without artificially limiting potential sources of compensation.
What does your contract with your client say? What does your contract with your sub-contractor say? Typically the client contract will not specify HOW the work gets done, just the deliverable(s), the price and the liability. Unless your client contract says otherwise, it's perfectly legal for you to farm out the work. It's also perfectly fine for you to deduct the cost of the sub. As long as that's profitable the IRS will have no problem for that at all: that's a perfectly normal business practice. Things are a bit more complicated if you farm out at a loss since that could be interpreted as a tax evasion scheme. However, as long as it's reasonable, that's fine. If there are defects in the work product, the client will come after you, regardless of who did the work. It's generally your responsibility to fix the issues, cover damages etc. You, in turn, can try to recover your damages from the sub, but that depends on the nature of the contract you have with the sub.