Most St. Cloud small businesspeople will recognize this post-startup scenario. It’s the moment when the whole idea of long-range planning first starts to make sense.
Although everyone who stakes his or her claim in a new business hopes for success, in the beginning, that outcome is far from certain. Throughout the early going, the first order of business has been simple survival—and that’s been a full-time job. You work your tail off 25 hours a day, tackle all the expected (and unexpected) challenges, and if the best happens, see the bottom line begin to brighten. And then, the reality dawns: your brainchild actually has a future—and it might just be a really bright one!
Last week, Forbes published a piece of business real estate advice for anyone in that happy position. It urges paying attention to one strategic area that can prove to be a “stealth benefit”—one significant enough to make the struggle that much more worthwhile.
In brief, Forbes recommends that as soon as you determine that your business has a future, it’s time to focus on establishing its permanent quarters. That means seizing control over your St. Cloud business’s real estate future. There are two directions:
Long-term lease. Stability can be vital for a fledgling enterprise, making a five- or ten-year (or even longer) lease essential for providing your business real estate the requisite permanence. Commercial leases are more complex than typical residential ones. That complexity makes it essential to evaluate competing offers using an apples-to-apples approach. A single net lease, for instance, carries relatively few obligations other than the monthly lease payment, whereas a double or triple net lease includes variables like property insurance and taxes—and even maintenance. Identifying the best offer takes a sharp pencil plus an awareness of the need to account for future unknowns—plus (as Forbes points out) the counsel of an experienced CPA.
Direct ownership. Here, you buy the property. It’s a considerable obligation, but your accountant can advise on the best ways to take advantage of some “stealth benefits” of becoming your own landlord. For instance, when your business pays you rent, that cash is passive income (you pay no payroll tax). Your company might also pay all of the property’s expenses, while you deduct depreciation and interest. If and when the property appreciates, it accrues to you. And ultimately, should you sell the business, you might lease your St. Cloud property to the new owner—creating a retirement income stream.
Long range business real estate planning may seem like a pie-in-the-sky abstraction when you first start out—but soon enough, its impact on your bottom line can become real enough. I’m here to help you make the most of the St. Cloud real estate opportunities that are out there!
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