If you have not had a professional with expertise in property taxes assess your property tax liabilities, you may not realize there are potentially significant savings available for you. Few CPAs have expertise in business property tax law, which can often be complicated and confusing. As one of the few accounting firms focused on this area, the majority of the companies we have worked with found they were paying entirely too much in property taxes. In this article, we will help you see how you might be able to reduce your company's tax burden.
What You Need to Know About Business Property Taxes
Most Focus on Income Tax
One of the reasons companies are paying too much in property taxes is simply that most of the focus of tax savings tends to be centered on income tax. Since few CPAs have an in-depth understanding of property taxes, many companies end up defaulting to the same income tax rules when filing their personal property tax listings. This often results in the accumulation of ghost assets, allowing the incorrect categorization of personal and real estate property, and other common pitfalls. One of the keys to improving your business’s tax situation is to consult with CPAs who have experience and expertise in business property taxes such as Sharon H Lyall CPA.
Personal Property and Ghost Assets
It is important to make sure your personal assets are properly identified and accounted for; however, few place the same emphasis on making sure they are properly removed from asset lists. Some assets that have gone long unused or even removed from your sites are likely still on your books but fully depreciated. These items are called ghost assets and are still being taxed by the county, regardless of their depreciation on your books. Ghost assets can take many forms, including:
- Fleet Vehicles: The ghosts of fleet vehicles tend to haunt companies that own numerous vehicles and frequently trade them in.
- Computer Equipment and Software: Every company needs their office technologies to remain current; however, sometimes hardware and software end up on your ledgers long after you upgraded.
- Machinery and Tools: If you have ever upgraded the machinery you use to make or fix things, it is likely you have collected some ghost assets over time.
- Copiers, Phones, and Fax Machines: It is quite likely that your phones and copiers have been upgraded, and the old ones you have discarded may remain on your ledgers.
- Office Furniture: Old desks, chairs, couches, and other office furniture may be hiding on your asset lists but are actually no longer present.
- Cell Phones: Many companies are paying taxes on cell phones that are obsolete or walked away when employees moved on.
- Former Employee Items: Sometimes employees may forget to turn in the effects before they move on or transfer to another branch. These items may be on your books even though the employee no longer has them.
Property valuations performed by counties take place at least every eight years in North Carolina but can be conducted more frequently. Wake County, for example, has historically conducted valuations every four years. Valuations are determined by mass appraisal techniques that can prove inaccurate. Each parcel and building is assigned a value based on a myriad of factors; however, if real estate property is incorrectly categorized it can result in significantly higher tax liability for your company.
When there are errors such as incorrectly categorized real estate property, ghost assets, and other property tax pitfalls on your books, these issues are compounded across each location. For example, we find with banks that vault doors may be taxed twice, both as personal property assets and real estate property. Across multiple locations, you can imagine how much this one issue can increase your property tax liability.
We have found savings for numerous companies across a wide variety of industries. To help you, we offer businesses a free property tax assessment. If we do not find savings, there is no charge. Whether you are considering appealing a property valuation, attempting to locate and remove ghost assets, or just trying to find out if there are savings available, we are here to help. Contact Lyall CPA today.