Everyone knows how hard running and operating a business can be. From the daily stress of the day to day operations to handling employees to dealing with the financial struggles that often come with running a business…it’s just plain tough! In fact, finding a way to stretch the dollar is often the biggest concern that business owners will have to face. Did you know that a cost segregation study can help alleviate some of the financial stress? In actuality, a cost segregation study can help lower your income tax burden and by doing so increase your cash flow. Let's take a more detailed look into the top four reasons to have a cost segregation study done.
1. Lower Income Tax Burden - Perhaps the biggest reason why most business owners will choose to have a cost segregation study done is the fact that the results of a cost segregation study will reduce or temporarily eliminate your federal income taxes. This is accomplished by using MACRS method of depreciation to accelerate depreciation on qualifying assets (e.g. tangible personal property: carpeting, millwork, cabinetry, dedicated plumbing or electrical, and land improvements: landscaping, parking, sidewalks, or curbs). At Segregation Holding, we offer a guarantee that is simple: if we can’t get you a minimum $10,000 federal income tax refund our services are free! As long as your business is profitable and you occupy a freestanding building or leasehold improvement, we can help.
2. Tax Credits and Refunds - If you have owned your building or leasehold improvement at least a year cost segregation will get you even more income tax savings. Generally speaking, a cost segregation study will identify depreciation that was missed in the past, so this will result in a tax credit. The tax credit will be carried forward to the current year via IRC Sec. 481 (a). This is also known as the “catch up provision” and is applied via IRS Form 3115. This additional tax credit is often quite substantial and without a doubt will help alleviate some of the financial burden that you may be experiencing.
3. Increase of Cash Flow – With the cost segregation study completed, the income tax burden has now been lowered which obviously increases cash flow. These additional funds can be used to continue making improvements to your business, allow you to remodel or expand or simply just put yourself in a much better financial situation. In the tougher times of the economy having this piece of mind is often priceless.
4. Potential to Negotiate Better Terms - There is a good chance that the property insurance may also be able to be lowered after the completion of a cost segregation study. This is due to the fact that assets that have been reclassified as tangible personal property are insured at a lower cost "per thousand" than real property, typically between 10 and 20%. Also, business owners may be able to call their lender and negotiate better terms as well. After all, cash flow has been increased and lenders may be more willing to give you better terms with the increased debt-service coverage.
These are just a few examples of how cost segregation can help your business. There is no better time than today to reach out to us and learn how much you qualify to get back from the IRS! At Segregation Holding, we offer a free quote - so you have nothing to lose and so much to gain from applying cost segregation to your facility.
Contact us at 972-897-8019.