Larger Inherited Business: Significant Payroll Obligations (20+ Employees)

A workforce of 20+ employees brings substantial payroll, benefits, and regulatory obligations. You may need to work with a dedicated payroll provider and benefits consultant.

ACA employer mandate may apply. Under IRC Section 4980H, applicable large employers (50+ full-time equivalents) must offer minimum essential health coverage or face penalties. With over 20 employees, you may already be at or near the threshold once part-time hours are converted to FTEs. Your CPA and benefits advisor need to verify this immediately.

Retirement plan administration is likely in play. Businesses of this size frequently sponsor 401(k) or SIMPLE IRA plans. As the new owner, you inherit fiduciary responsibility for these plans, including annual Form 5500 filings with the Department of Labor. Missed filings carry penalties starting at $250 per day.

Payroll is a weekly obligation. With 20+ employees, payroll tax deposits are almost certainly on a semi-weekly schedule, and the dollar amounts are substantial. The trust fund recovery penalty under Section 6672 makes you personally liable for withheld taxes that are not deposited.

The pitfall: New owners of larger businesses often focus on revenue and operations while payroll and benefits compliance slip. These are the areas where penalties accumulate fastest and personal liability is highest.