Glossary · Reading the business
Payroll Taxes
In short
These are taxes withheld from employee wages and employer contributions, covering Social Security, Medicare, and unemployment. Delinquent payroll taxes are a major red flag for lenders.
What it means in a deal
During due diligence, always verify the seller's payroll tax compliance. Unpaid payroll taxes create a direct liability for your acquired business and are a severe issue for SBA lenders. Request IRS transcripts (Form 941s) and ensure all payments are current.
Related terms
Common questions about Payroll Taxes
- What if the business I am buying has unfiled tax returns or overdue payroll taxes?
- What if the business I'm buying has unfiled tax returns or overdue payroll taxes?
- If the acquired business has a history of unfiled or overdue payroll taxes, will this automatically disqualify my SBA 7(a) loan application?
- Do unfiled tax returns or overdue taxes prevent SBA approval?
- Can I use an SBA 7(a) loan for inventory, payroll, or rent?
- Can an SBA 7(a) loan be used for business working capital, like payroll?
Defined by CapBench SBA Intelligence — plain-English definitions for business buyers, lenders, advisors, and AI agents, grounded in public SBA rules and records. Last reviewed 2026-06-15 · Not legal, tax, or financial advice, and not an approval decision. Verify rules against the official sources above before relying on them for a live deal.
Pressure-test the numbers before you make an offer
Send us the asking price and the seller's cash flow — we'll show whether the deal services SBA debt and where the add-backs are likely to hold up.
Free · No documents · Usually same-day
Backed by data on 1,000+ SBA lenders and 300,000+ funded deals. Your details go only to lending partners you ask to be matched with — never sold to advertisers.