Site Location

The perfect site location for a startup business can be determined by a multitude of factors. Some small business owners may even become overwhelmed when trying to locate the right sites or simply trying to decide what needs to be available in order to make their businesses thrive. One often overlooked consideration of the location of a business site is the tax options for the startup business owner.

Taxes and the Site Location

There are several considerations of how the details of the lease will impact a business’ taxes that must be taken into account before entering into a commercial lease.

• Any time a lease agreement dictates that the payment of the rent will establish equity or eventually lead to titled ownership of a site location, the business owner’s taxes will be severely affected. This is essentially like a rent-to-own program that can be filed for residential property, and is basically like entering into a non-conventional mortgage.
• If at any time the tenant is forced to pay a rent that is substantially higher than the actual assessed value of the rental property, then there will be extra forms to be filed. Generally, this is considered a loss, and it must be reported as such.
• Paying interest only on a lease will negatively affect your taxes as well.

Call for more information on how your site location and lease may adversely affect your taxes.