Leasing A Business -An Alternative Exit Strategy

4 stars based on 32 reviews

Lease-To-Own Business - Accounting? Business and Money Asked by: I am having a rather difficult time coming up with financing options due to the fact I do not have a sufficient sum of money in the bank for a down payment. Someone recently suggested the only way I may be able to purchase this business is in a Lease-To-Own situation. And I strongly think the seller would accept this proposal due to the fact there is little-to-no interest from other potential buyers.

The concept sounds pretty simple, but I guess I do not understand it fully. An example of how it would work is as follows: How is the accounting done on the buyer and seller's side lease with option to buy business the Lease with option to buy business period? What are the pros-and-cons for the buyer and seller?

What are the tax implications for the buyer and seller? I am attempting to get feedback so that I can present this to the seller in a way it is a good deal for each of us. Any lease with option to buy business would be greatly appreciated. Some form of seller financing is extremely common when lease with option to buy business businesses of the size you describe are sold. Leasing to own is but one of several methods, the most common of which is the owner giving you a loan in the form of a promissory note, which is then paid back from the business' cash flow.

Another method is an "earn-out," which lease with option to buy business you paying the seller ongoing payments based on the business' performance for a specified period of time up to a set amount. The accounting for both parties during the lease-to-own period and once the business is sold is potentially quite complex depending on how the deal is structured.

The seller has the advantage of deferring at least a portion of the capital gains taxes on the sale of the business until he or she actually sells it to you. Furthermore, the seller gains the benefit of the lease payments, which would otherwise go to a bank providing financing.

Finally, the seller gets a sale, which otherwise may not lease with option to buy business because most people looking to buy lease with option to buy business of that size have difficulty obtaining bank financing. The IRS probably would characterize your lease lease with option to buy business a sale, so you would be eligible to depreciate a portion of the property and to deduct a portion of your rental payments as effective interest.

The sections on "Payment Terms" http: I have provided a number of references for you to review regarding seller financing and the sale of small businesses. They explain how this is commonly structured, along with the many variations that are possible, and how these can benefit both the buyer and the seller. The range of possibilities is considerable; you are really limited by only what you can get the seller to agree to and how motivated you want the seller to be to remain involved in the business until the final sale is completed.

Because the tax consequences can vary considerably based on the specifics of how the sale is structured, I encourage you and the seller to consult with a CPA before finalizing a transaction. Request for Answer Clarification by flashingbeacon-ga on 03 Dec Were you able, or can you, find anything else on the accountability of a "lease-to-own" business?

Clarification of Answer by wonko-ga on 04 Dec According to the following reference, you nearly always want to just purchase the assets of the business rather than the business' stock. Those assets are then depreciated, and if you are leasing them, you get to treat a portion of your lease payments as an interest deduction. Sincerely, Wonko "Tax Benefits When you purchase physical assets like tools, you qualify for a tax deduction called "depreciation.

If the machine was 15 years old and fully depreciated when you purchased the stock, then no more tax depreciation could be claimed. The answers and the links provided are great for my continued research. Answers and comments provided on Google Answers are general information, and are not intended to substitute for informed professional medical, psychiatric, psychological, tax, legal, investment, accounting, or other professional advice.

Google does not endorse, and expressly disclaims liability for any product, manufacturer, distributor, service or service provider mentioned or any opinion expressed in answers or comments. Please read carefully the Google Answers Terms of Service. If you feel that you have found inappropriate content, please let us know by emailing us at answers-support google.

Best forex trading times uk

  • Japanese binary options robot review 2015

    Operar con noticias forex

  • Binary trading norske

    Commodity brokerage calculator india

Primer binary option and pairs trading strategy pdf

  • Spx forex binary options magnetron

    Day trading university download

  • Installing the binary options app 810

    Apache optionbuilder example

  • Qual a melhor opcao de investimento hoje

    Binare optionen traden mit bdswiss

Binary options system 21 decimal 60 seconds

32 comments Solved convert 16383 from decimal to binary

The original binary option robot review

ExtendScript files have the. jsx or. jsxbin filename extension. If you edit a script while After Effects is running, you must save. After Effects for the script to appear in the Scripts menu, though.