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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

Closing a Business Involves a Number of Tax Responsibilities

While many facets of the economy have improved this year, the rising cost of living and other economic factors have caused many businesses to close their doors. If this is your situation, we can help you, including taking care of various tax responsibilities.

To start with, a business must file a final federal income tax return and some other related forms for the year it closes its doors. The type of return that must be filed depends on the type of business you have. For example:

Sole Proprietors will need to file the usual Schedule C, “Profit or Loss from Business,” with their individual returns for the year they close their businesses. They may also need to report self-employment tax.
Partnerships must file Form 1065, “U.S. Return of Partnership Income,” for the year they close. They also must report capital gains and losses on Schedule D. They indicate that this is the final return and do the same on Schedule K-1, “Partner’s Share of Income, Deductions, Credits, etc.”
All Corporations need to file Form 966, “Corporate Dissolution or Liquidation,” if they adopt a resolution or plan to dissolve an entity or liquidate any of […]

By Linkenheimer LLP|2024-07-23T13:47:35+00:00July 23rd, 2024|business, tax implications|0 Comments

Sustainable Business Practices Through Technology

As environmental concerns become more pressing, businesses of all sizes are recognizing the importance of adopting sustainable practices. For companies in California, integrating sustainability into business operations not only helps protect the planet but also appeals to an increasingly eco-conscious consumer base. Technology offers a wealth of solutions to help businesses achieve their sustainability goals. Here are several ways technology can drive sustainable business practices:

1. Energy Management Systems

One of the most effective ways to reduce a company’s carbon footprint is through energy management systems (EMS). These systems use smart sensors and software to monitor and optimize energy usage in real-time. By identifying areas where energy is wasted, businesses can implement changes that lead to significant reductions in energy consumption and costs.

2. Smart Lighting and HVAC Controls

Upgrading to smart lighting and HVAC systems can drastically cut energy usage. Smart lighting systems, such as LED bulbs combined with motion sensors and timers, ensure that lights are only on when needed. Similarly, smart thermostats and HVAC controls can adjust temperatures based on occupancy and usage patterns, reducing energy waste.

3. Cloud Computing

Moving business operations to the cloud can significantly reduce the environmental impact associated with maintaining […]

By Linkenheimer LLP|2024-07-02T16:30:12+00:00July 2nd, 2024|Tech, tips|0 Comments

4 Ways Businesses Can Better Control Cash Flow

From the minute they open their doors, business owners are urged to keep a close eye on cash flow. And for good reason — even companies with booming sales can get into serious trouble if they lack the liquidity to compensate employees and pay their bills. Here are four ways businesses can better control cash flow.

Stick with the budget

Although creating and maintaining a detailed annual budget can be tedious and contentious, it’s fundamental to good cash flow management.

Items in your budget should align with your stated strategic goals for the year. If you can’t effectively argue how an item enables a particular goal, question its merit. Doing so will help you avoid unnecessary spending and keep funds available for valid business needs.

Also bear in mind that, for analytical purposes, a budget is useful only if you update it regularly to accurately reflect actual spending. For example, you may have overbudgeted or underbudgeted on some items and, thus, spent more or less than anticipated.

Check your statement of cash flows

Most companies should generate financial statements, preferably those that conform to Generally Accepted Accounting Principles (GAAP). Financial statements that comply […]

By Linkenheimer LLP|2024-06-13T12:45:56+00:00June 13th, 2024|business, cash|0 Comments

Timelines: 3 Ways Business Owners Should Look at Succession Planning

Business owners are rightly urged to develop succession plans so their companies will pass on to the next generation, or another iteration of ownership, in a manner that best ensures continued success.

Ideally, the succession plan you develop for your company will play out over a long period that allows everyone plenty of time to adjust to the changes involved. But, as many business owners learned during the pandemic, life comes at you fast. That’s why succession planning should best be viewed from three separate but parallel timelines:

1. Long term. If you have many years to work with, use this gift of time to identify one or more talented individuals who share your values and have the aptitude to successfully run the company. This is especially important for keeping a family-owned business in the family.

As soon as you’ve identified a successor, and that person is ready, you can begin mentoring the […]

By Linkenheimer LLP|2024-05-30T19:52:08+00:00May 30th, 2024|business, succession planning|0 Comments