When you buy a business, you don’t want the seller to turn around, create a similar new business, and start competing with you. Okay. That’s obvious, and you already know you’ll need a noncompete agreement. What you may not know is that noncompete agreements have very real tax consequences. Want to learn how the IRS treats your tax deductions as the buyer of a business … [Read more...]
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Buying a business? Debt can be good!
We’re always told that debt is a bad thing. That’s generally true except when debt is a good thing. Like when you’re about to buy a business and operate it as a C corporation. That’s right. The IRS treats corporate debt more favorably than corporate equity. So it may be a tax-smart move to include some debt (owed to outside lenders) and/or some owner-debt (owed to … [Read more...]
Why an HSA beats a traditional IRA!
Ask “What’s the best way to save for retirement?” and most people will mention an IRA. But I think you should first consider an outstanding alternative to the traditional IRA… a Health Savings Account (HSA). Important: Don’t think of an HSA as merely a way to pay for medical bills. In reality, an HSA is a powerful way to turbocharge your retirement savings and in many ways, … [Read more...]
Read this before you buy a business!
What’s the smart way to acquire a business? The answer is simple… Buy the target company’s stock and treat the deal as an asset purchase! When you do, both you and the seller benefit tax-wise. But be aware of this important fact… When you’re buying a business, you really have to know what you’re doing. Which is why I suggest that before you do anything, you take a close … [Read more...]
How to avoid the “self-rental” trap
Here’s the “self-rental” story in a nutshell: You own a business that needs office space… So you buy a building and rent office space to your business… You collect the rent and depreciate the property… Your business gets to deduct the rent it pays you… As a result, the money never leaves your pocket. Sounds great, right? Well, it is if you know the special rules that apply … [Read more...]