Atlanta CPA...Is it Time For Your Business To Buy a Building?
Should You Buy a New Building In Your Own Name, an LLC or Your Business's Present Entity?
When looking to buy new building for your business I would almost always suggest putting the building in a separate LLC so that you will liability protection from the building to the business and from the business to the building.
This will also give you greater flexibility relative to making decisions about the business and the building separately.
Entrepreneurs are proficient at their chosen task they often fail at planning, financial and administrative functions. These functions are not the lifeblood of a business; sales are. However, without these functions, even the best sales organizations will eventually fail. The owner who anticipates the needs of a business will be better suited to handle the emergencies that arise. Accordingly, the owner that handles these other tasks in addition to sales will succeed.
Company owners are constantly faced with everyday decisions that affect the short and long term growth and profitability of their business. Everyday risks occur and have to be immediately addressed and handled. Long term strategic decisions such as opening a new location or getting into a new business need to be carefully reviewed in regards to financial, manpower, and market conditions. These risks should be taken with excess dollars that can be afforded to be lost while the nest egg always has to be protected at all costs.
An owner's focus should be on anticipating the future and how to get there. This necessitates that financial and marketing data should be recorded in detail monthly and analyzed for trends and future viability. The pulse of the business has to be monitored in order to ensure future viability; ignore it and the patient will die.
If/when you buy new building in a separate Limited Liability Company, your present company would sign a lease/rental agreement and then pay rent to the LLC and then the LLC would pay the mortgage.
I would suggest doing what is commonly called a triple net lease, where your present company would pay in addition to rent the utilities, taxes and insurance.
Working with your CPA, while they serve as a part-time Virtual Chief Financial Officer can help with many financial decisions that are out of the ordinary scope of doing business to help ensure your business both survives and thrives.
John Dillard, CPA of His CPA, PC, 1940 Woods River Lane, Duluth, GA 30097 Phone 770-814-9304 www.HisCPA.com A Christian CPA Firm