There are many difficult struggles involved in owning a business, and one of these is the problem of constantly making sure your business is staying profitable. If your company is in a state with a high property tax, it’s helpful to know how you can reduce your property tax burden. The last thing any business owner wants to do is to sell or close the business because of uncertainty related to managing property taxes. There are a few things you should know that may help lower your commercial property taxes as a business owner.
How Can I Keep My Commercial Property Taxes Low?
- Understand that property tax is not a fixed cost: A big mistake that business owners might make is to treat their commercial property taxes just like their income taxes. Income tax is a fixed cost, but property tax is a variable amount. Oftentimes, a company will attempt to focus their property tax filing on making sure their taxes are being paid on time without really examining whether they’re paying a fair amount. It will be up to you, as the business owner, to decide if local taxing jurisdictions have overstated your property’s tax value.
- Ensure your property is in the right jurisdiction and maintain correct asset records: Sometimes, certain personal property will be put under your personal name instead of your business name. If you move your property across state lines, or if certain machinery is moved or discarded, records need to be properly kept in order to avoid paying unnecessary personal property taxes.
- Know how to classify your assets properly: There’s a big difference between taxable and non-taxable real estate and personal property. Make sure that you’re classifying each piece of personal property correctly when you report it to your tax jurisdiction.
- Shop around in neighboring jurisdictions: If you’re building a new business, you should always keep your eye on neighboring states and different jurisdictions within a state, so you can find the best tax rate for your company.
Knowing how to keep your commercial property taxes reduced is crucial if you want to maximize your business’s potential. However, this can be a lot to handle if you’re a small business or if you’re just unfamiliar with commercial taxes. Contact the attorneys at Hecht Walker, P.C. for more information.