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Dimitry K., Esq.
Dimitry K., Esq., Attorney
Category: Business Law
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Experience:  Run my own successful business/contract law practice.
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Business, Labor, Tax Law - LLCs When Things go BAD!

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<p>This is a Business & Employment law question relates to the State of OH, the State of LA, Federal Employment & Business Law & Tax Law. The depth of your response will heavily weight on my decision of acceptance of an answer or to choice to utilize an alternative Expert. As this is understandably a complex question that will take more than a quick form response. I will contact legal representation, however, I first need to know some basics of how to expect to handle this and some guidance of how, and through whom. BACKGROUND: If I am a 5% owner in a company, I helped build it, but I receive a monthly salary as agreed upon in the original Documents (that I would receive 5% ownership and a certain salary for the 1st 5yrs). Now the Company is in financial difficulty due to poor mgmt decisions, etc. Earlier this year, I was approached by the M.M. to accept $1 less for 1 month, so the Company could meet bills. I agreed to the 1 month cut. The M.M. turned the $1k cut into a $1.5k cut, and then implemented on a monthly basis without any approval or agreement by me. I have written copies of the checks that show "partial payroll payment". He told me at one point that I would get a notarized letter stating that he owed me the missing money. We have had a falling out (several), and are no longer speaking. Today I received a check for "Oct payroll" again at the rate minus the $1.5k. He told me the other day that 'guaranteed disbursements' are not guaranteed and basically I will take whatever he gives me. He has put up real estate, signed loan docs, etc. and is the Managing Member. I went from being a partner, to now apparently an employee to now the red-headed stepchild. I own, because I have always paid for without reimbursement, and purchased under my own name. The domain name, the company email service, and several other key company services. QUESTIONS: 1) Do I have any legal standing for recouping the $1,500 a mth since Feb/2010 approx an accumulated $10k-$12k, which was/is being held back from my payroll? (Understand there is another person in the Company a much smaller percentage owner, who never put a dime into the company, whose paycheck I recently learned was NEVER effected and who receives all that he is owed each month. 2) Should I cash the check for this month marked "Oct payroll", instead of the "Oct partial payroll" as it should be written? 3) If I chose to turn off or bar access to the services that are in my name, that I pay for monthly in my name, are there any grounds for legal action against me? Do I have the right to turn these services off since they are in my name and I pay for them? 4) I am concerned because once I pay my overdue taxes, the money I have may not cover all of what is due (as I was counting on that money which was held back from me to be able to cover and pay my taxes). I waited to pay them, because I was told that money would be returned to me and I did not have the funds to pay them without that money, is there anything that will protect me from the IRS? I mean is there a possibility of change in status from "owner" to "employee" with a portion of ownership, since I have no say so and funds are being withheld? Is there some action which I can file with the IRS against the company? I do have an additional question regarding my finding representation, but not one to be posted in the open forum, it is more of an add on question. Relating to my finding representation to battle the size of the atty (due to his "connections" intra state, that will rep this other person.</p><p>Due to the complexity of the question and the desired response, the answer fee is $95, Thank you in advance for your time and assistance. <img src="/tinymce/jscripts/tiny_mce/plugins/emotions/images/smiley-smile.gif" border="0" alt="Smile" title="Smile" width="18" height="18" /></p>
Submitted: 3 years ago.
Category: Business Law
Expert:  Dimitry K., Esq. replied 3 years ago.
Thank you for your post. I will attempt to assist you. As it appears you have quite a few questions, I will go down the list to ensure I will respond to each one.

1) Do I have any legal standing for recouping the $1,500 a mth since Feb/2010 approx an accumulated $10k-$12k, which was/is being held back from my payroll? (Understand there is another person in the Company a much smaller percentage owner, who never put a dime into the company, whose paycheck I recently learned was NEVER effected and who receives all that he is owed each month.
If you have an actual contract or an agreement under which you were entitled to a certain portion, then yes. However, being a part owner, if the company is doing poorly, you can also be held responsible and can therefore be requested to take less of a profit. In other words this comes down to profit--if this was salary, then you are entitled to get it back, if this is profit, then probably not.

2) Should I cash the check for this month marked "Oct payroll", instead of the "Oct partial payroll" as it should be written?
Sure, just cash it with the words "under protest", keep a copy of the check, and send a letter to the company with the running tally of what they owe you.

3) If I chose to turn off or bar access to the services that are in my name, that I pay for monthly in my name, are there any grounds for legal action against me? Do I have the right to turn these services off since they are in my name and I pay for them?
Yes, you can be sued for "tortious interference with a business interest". In essence the company can sue you for attempting to ruin and destroy the company through your behavior. While the access are under your name, if it is essentially a business interest or asset, you cannot remove that service from the company.

4) I am concerned because once I pay my overdue taxes, the money I have may not cover all of what is due (as I was counting on that money which was held back from me to be able to cover and pay my taxes). I waited to pay them, because I was told that money would be returned to me and I did not have the funds to pay them without that money, is there anything that will protect me from the IRS?
That is a separate issue completely. Your obligation to the IRS is whilly separate from the fact that you may be getting underpaid by the company. For that you should contact the IRS and try to work out a payment plan that will be more in line of what you are now receiving.

I mean is there a possibility of change in status from "owner" to "employee" with a portion of ownership, since I have no say so and funds are being withheld?
No there is not. Unless you literally sell off your share, you are still deemed an owner.

Is there some action which I can file with the IRS against the company?
I am not sure for what grounds exactly. You can always contact the IRS and file a complaint over tax fraud. To do that, go to the link below:

http://www.irs.gov/individuals/article/0,,id=106778,00.html

Edited by Dimitry Alexander Kaplun on 11/4/2010 at 4:16 AM EST
Dimitry K., Esq., Attorney
Category: Business Law
Satisfied Customers: 36753
Experience: Run my own successful business/contract law practice.
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