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Dwayne B.
Dwayne B., Attorney
Category: Business Law
Satisfied Customers: 33404
Experience:  Practicing for over 20 years and helped a number of businesses with litigation.
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I have a small bookkeeping company. A construction client

Customer Question

I have a small bookkeeping company . A construction client ask me if I can accept cash on behalf of his customer and then use that cash to pay his employees and charge him a fee. Is this legal? What tax or legal liability do I have for such a scenario?
JA: Thanks. Can you give me any more details about your issue?
Customer: my issue is, if I collect money on his behalf will the IRS if audited claim the money belong to me second issue is, if I pay his employees, will i have any legal responsibilities towards them? since this is a construction company do I need any license or insurance requirement?
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Submitted: 1 year ago.
Category: Business Law
Expert:  Dwayne B. replied 1 year ago.

Hello and thank you for contacting us. This is Dwayne B. and I’m an expert here and looking forward to assisting you today. If at any point any of my answers aren’t clear please don’t hesitate to ask for clarification. Also, I can only answer the questions you specifically ask and based on the facts that you give so please be sure that you ask the questions you want to ask and provide all necessary facts. Please note: This is general information for educational purposes only and is not legal advice. No specific course of action is proposed herein, and no attorney-client relationship or privilege is formed by speaking to an expert on this site. By continuing, you confirm that you understand and agree to these terms.

Assuming you are acting just as his payroll company and accountant, then there really is no extra liability for you so long as you report the cash payments if they exceed the IRS amounts that require reporting ($10,000). If it does exceed $10k then you have to file the Bank Secrecy Act Currency Transaction Report.

You will also have to make ti clear that you are paying them on behalf of the company and not on your behalf. Many companies use a payroll companies to actually cut the checks and handle the accounting, the only part that is unusual is the fact that he wants to give you cash.

Expert:  Dwayne B. replied 1 year ago.

Also, you may want to go through and read several of the articles listed on this Google search:

https://www.google.com/webhp?sourceid=chrome-instant&ion=1&espv=2&ie=UTF-8#q=how%20much%20cash%20can%20you%20deposit%20before%20reporting

Customer: replied 1 year ago.
One correction. I used the term "cash" loosely. I will be receiving payment via wire from the construction client customer thus the reason he want's me to use receive the payment. So to be clear, the customer of the construction company wants to pay me, then I pass the money through to the construction company.
Expert:  Dwayne B. replied 1 year ago.

I still don't see a huge issue unless you pay the money out and then he reverses the wire or something else happens. If you are working as an Accounts Receivable for the construction company then that opens up other issues but if it is just a matter of you acting as his payroll agent nothing changes from what I said above, other than you're not dealing with cash. You would probably want the money wired into an account owned by the construction company and then you write the checks from that account, otherwise you are opening yourself up to potential issues that will require explanations later.

Customer: replied 1 year ago.
What's the liability for receiving payment in care of someone else?
Expert:  Dwayne B. replied 1 year ago.

Can you rephrase your question? Also, I need to ask you to consider issuing your rating on the initial answers to the questions before the question times out.

Even after issuing the rating the rating you can come back for follow ups if you have them. Issuing the rating just ensures that 1) I receive credit and 2) the question doesn't time out and close.