I own 2 small businesses and just bought a third. Owned a small business for 12 years. I suppose the first thing that should be asked is how will you finance your purchase? Banks want to see good collateral and a history of ON-TIME credit payments. This is where you should run a credit check to see where you stand because the higher your credit score, the more leverage you have to negotiate interest rates. I can expound upon banks and loans, but there are so many more questions to ask.
How will you incorporate your new business? C-Corp? LLC? S-Corp? Partnership? LLC taxed as S-Corp is the best way to incorporate your business because it allows you, the owner, to also be an employee AND it offers the best tax saving scenario for owner/employee endeavors.
Taxes: You can expect low taxes your first 3 years. Typically, a business loan runs 6-7 years, but you can finance for pretty much any length of time (if you have the leverage, see point 1). So, within the first 3 years of a business loan, you are writing off interest and depreciating business equipment. Depreciation is only beneficial for about 3 years. After that, what amount you depreciate is inconsequential to taxes. Some depreciation tax loopholes were closed by Obama, meaning equipment purchases can only be depreciated over 1 year to a certain amount. After about 3 years you will see your taxes increase like never before, so be prepared. Don't go out and buy that new BMW because you may regret it!
Tax write-offs: Over-rated! Rarely do tax write-offs benefit a LLC. Remember, what you buy through your business still has to be paid by someone and the someone is YOU. So, try to accomplish the most by spending the least amount and you will be fine. Your office or employees do not need fancy $5.00 pens, $.69 Bics will work just as well.
Since you seem to be focused on tax write-offs, I will tell you a few tax tips that may help. Do you have a physical office? If you do, then you can write-off car mileage (if done properly. Again, I can expound upon this if you really want). If you don't have an office and work from your home, then you can write-off your home office. If you have an office and store stuff at your house, then pay yourself rent for storage and deduct that from your taxes. Cell phones, computers, printers, pens, toilet paper, soap, paper towels, tissues, etc. are all write-offs.
Lastly, here are my GOLDEN tips for new small business owners: keep track of your overhead and cash-flow with Quickbooks. During your first couple of years of maximum depreciation, take that extra cash and invest it! After 3-5 years, you will come out ahead and will be able to buy that BMW and still have money left over in your investment account. Your employees are NOT your friends. Do NOT Facebook them or let them know much about your private life. I don't care how close you are, KEEP YOUR PRIVATE LIFE PRIVATE! Lastly, remember you will always be the first one in and last one out so be prepared for long hours.
Hope that helped. Good luck!
