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Advantages of Keeping Your Business Separate from its Real Estate

Does your business require real estate for its operations? Or do you hold property titled under your business’s name? It might be worth reconsidering this strategy. With long-term tax, liability and estate planning advantages, separating real estate ownership from the business may be a wise choice.

How taxes affect a sale

Businesses that are formed as C corporations treat real estate assets as they do equipment, inventory and other business assets. Any expenses related to owning the assets appear as ordinary expenses on their income statements and are generally tax deductible in the year they’re incurred.

However, when the business sells the real estate, the profits are taxed twice — at the corporate level and at the owner’s individual level when a distribution is made. Double taxation is avoidable, though. If ownership of the real estate is transferred to a pass-through entity instead, the profit upon sale will be taxed only at the individual level.

Safeguarding assets

Separating your business ownership from its real estate also provides an effective way to protect the real estate from creditors and other claimants. For example, if your business is sued and found liable, a plaintiff may go after all of its […]

By Linkenheimer LLP|2024-10-10T18:31:18+00:00October 10th, 2024|business, llc, real estate|0 Comments

Reasons an LLC Might Be the Ideal Choice for Your Small to Medium-Size Business

Choosing the right business entity is a key decision for any business. The entity you pick can affect your tax bill, your personal liability and other issues. For many businesses, a limited liability company (LLC) is an attractive choice. It can be structured to resemble a corporation for owner liability purposes and a partnership for federal tax purposes. This duality may provide the owners with several benefits.

Like the shareholders of a corporation, the owners of an LLC (called members rather than shareholders or partners) generally aren’t liable for business debts except to the extent of their investment. Therefore, an owner can operate a business with the security of knowing that personal assets (such as a home or individual investment account) are protected from the entity’s creditors. This protection is far greater than that afforded by partnerships. In a partnership, the general partners are personally liable for the debts of the business. Even limited partners, if they actively participate in managing the business, can have personal liability.

Electing classification

LLC owners can elect, under the “check-the-box rules,” to have the entity treated as a partnership for federal tax purposes. This can provide crucial benefits to […]

By Linkenheimer LLP|2024-09-04T15:03:51+00:00September 4th, 2024|llc, small business|0 Comments

Important Update: The Corporate Transparency Act and Its Impact on Your Business

Starting January 1, 2024, a significant change will affect many businesses. The Corporate Transparency Act mandates corporations, limited liability companies (LLCs), limited partnerships, and other entities such as non-U.S. companies that register to do business in the U.S. through a filing with a Secretary of State to file a report with the Financial Crimes Enforcement Network (FinCEN). This report will disclose detailed information about the entity’s “beneficial owners.” Most entities must file these reports by January 1, 2025. However, new entities formed in 2024 must file the report within 90 days of the entity’s formation.

Key Points to Note:

Purpose: This federal initiative aims to combat money laundering and tax evasion by shedding light on the actual individuals behind corporate entities.
Reporting Requirements: The information required includes the legal name, residential address, date of birth, and an identification number (from a passport, driver’s license, or state ID) of the beneficial owners; the entity will also have to provide an image of any of these forms of documentation.
Penalties for Non-Compliance: Failing to report or update this information can lead to substantial fines, including fine of up to $500 per day until the violation […]

By Linkenheimer LLP|2024-01-04T17:01:35+00:00January 4th, 2024|business, llc, New Tax Laws, News, s corp|0 Comments

The Advantages of Using an LLC for Your Small Business

If you operate your small business as a sole proprietorship, you may have thought about forming a limited liability company (LLC) to protect your assets. Or maybe you’re launching a new business and want to know your options for setting it up. Here are the basics of operating as an LLC and why it might be a good choice for your business.

An LLC is a bit of a hybrid entity because it can be structured to resemble a corporation for owner liability purposes and a partnership for federal tax purposes. This duality may provide the owners with the best of both worlds.

Protecting your personal assets

Like the shareholders of a corporation, the owners of an LLC (called “members” rather than shareholders or partners) generally aren’t liable for the debts of the business except to the extent of their investment. Thus, the owners can operate the business with the security of knowing that their personal assets are protected […]

By Linkenheimer LLP|2023-08-21T20:18:03+00:00August 21st, 2023|llc, small business|0 Comments

Why An LLC Might Be The Best Choice Of Entity For Your Business

The business entity you choose can affect your taxes, your personal liability and other issues. A limited liability company (LLC) is somewhat of a hybrid entity in that it can be structured to resemble a corporation for owner liability purposes and a partnership for federal tax purposes. This duality may provide you with the best of both worlds.

Like the shareholders of a corporation, the owners of an LLC (called “members” rather than shareholders or partners) generally aren’t liable for business debts except to the extent of their investment. Thus, they can operate the business with the security of knowing that their personal assets are protected from the entity’s creditors. This protection is far greater than that afforded by partnerships. In a partnership, the general partners are personally liable for the debts of the business. Even limited partners, if they actively participate in managing the business, can have personal liability.

Check-the-box rules

LLC owners can elect under the check-the-box rules to have the […]

By Linkenheimer LLP|2022-08-24T17:00:46+00:00August 24th, 2022|business, entity, llc|0 Comments