Acquiring a business in Miami is a promising opportunity, but it’s not without its challenges. Beyond evaluating operations, employees, and profitability, understanding the specific tax landscape is critical. Failure to address certain tax liabilities and compliance issues can cost you time, money, and even the deal itself. 

To help you avoid pitfalls, we’ve identified 9 tax due-diligence traps that frequently derail business acquisitions in Miami. Whether it’s unpaid sales taxes or hidden payroll liabilities, knowing what to look for can make all the difference. 



By the end of this guide, you’ll have the tools to evaluate a business deal with more confidence and safeguard your investment. 

Why Tax Due Diligence Matters in Miami 

Before we jump into the traps, it’s important to understand the role taxes play during a business acquisition. Miami, as part of Florida, has its own unique tax regulations. From state-specific sales tax to federal filings, the tax compliance of the business you'll acquire reflects directly on your future liabilities. 

Thorough tax due diligence ensures that you:

• Identify Outstanding Liabilities: Avoid legal and financial repercussions by addressing unpaid taxes. 
• Prevent Post-Acquisition Surprises: Reveal hidden debts or non-compliance issues before finalizing the deal. 
• Understand Tax-Efficiency Opportunities: Take advantage of tax-saving opportunities specific to Miami or Florida.

The 9 Tax Traps That Derail Business Acquisitions 

1. Unpaid Sales Tax Liabilities

Florida’s sales tax regulations are strict, and many businesses fail to comply fully. Sellers may have unpaid sales taxes from years of underreporting or late filings. 

• Red flag: Look for discrepancies between sales revenue and filed returns in the seller’s records. 
• Pro tip: Partner with a tax consultant, like Sela Tax, to conduct an audit of sales tax compliance for peace of mind. 

2. Payroll Tax Compliance Issues

Florida-based businesses still need to comply with federal payroll taxes. Failing to withhold or deposit payroll taxes properly can lead to IRS penalties that may carry over after the acquisition. 

• Red flag: Late or missing Form 941 filings or 1099 discrepancies. 
• Pro tip: Request a review of payroll accounts handled by tax professionals. 

3. Unfiled or Late Tax Returns

Outstanding tax returns create uncertainty about liability and may mean that the IRS or Florida Department of Revenue could issue penalties. 

• Red flag: Gaps in filing history, like missed corporate income tax returns. 
• Pro tip: Hire experts to assess the tax return history for unfiled obligations. 

4. Unrecorded Tax Audits or Disputes

Some businesses have ongoing or hidden tax disputes. If unresolved, these disputes could transfer to the buyer.

• Red flag: Any correspondence with the IRS or Florida Department of Revenue that indicates open cases. 
• Pro tip: Dig into the seller’s tax records for any communications about audits or reviews. 

5. Sales Tax Registrations Across States

For Miami businesses catering to customers across state lines, registration in other states could lead to multi-state tax liabilities. 

• Red flag: Out-of-state customers with no corresponding multi-state sales tax registrations. 
• Pro tip: Work with a professional to verify multi-state tax obligations. 

6. Unreported Cash Transactions

Cash-based businesses are common in industries like hospitality and retail but come with higher tax risks. Often, taxable revenue is underreported. 

• Red flag: Revenue discrepancies between sales records and deposited funds. 
• Pro tip: Conduct a forensic analysis of cash flow for accurate reporting.

7. Employee or Contractor Misclassification

Misclassifying workers as contractors rather than employees results in tax liability risks, such as unpaid payroll taxes and penalties. 

• Red flag: Excessive reliance on independent contractors without proper 1099 filings. 
• Pro tip: Confirm whether contractor classifications meet IRS guidelines. 

8. Florida Documentary Stamp Taxes on Transfers

Business assets in Florida, including property or real estate, are often subject to documentary stamp taxes during the sale. Overlooking this can lead to costly surprises. 

• Red flag: The failure of agreements to account for stamp taxes. 
• Pro tip: Ensure contract reviews include all applicable taxes. 

9. Change in Tax Entity Structure

When acquiring a business, changes in entity structure (like moving from an LLC to a corporation) can affect taxation, including additional compliance steps that must be fulfilled. 

• Red flag: Tax delays caused by changes in ownership or restructuring. 
• Pro tip: Consult with tax attorneys to evaluate the tax repercussions of restructuring. 

Expert Guidance Saves You Stress and Money 

While these 9 tax issues can seem overwhelming, the good news is that they are manageable with the right expertise. Tax compliance is complex, but it doesn’t have to ruin your acquisition plans. 

This is where Sela Tax comes in. With over a decade of experience helping Miami businesses, we specialize in sales tax, payroll tax compliance, and small business consulting. Whether you need an audit review or expert insights on liabilities, our team is here to help. 

Take the First Step Toward Success 

Buying a business in Miami is an exciting venture, but it requires careful tax due diligence. The cost of overlooking these critical tax traps can derail deals and burden you with liabilities. 

To ensure your purchase is smooth and risk-free, contact Sela Tax today for a comprehensive consultation. Our team of expert consultants will support you through every step of the acquisition process.