The strategic benefit of buying a business, now
Starting or buying a barre fitness business at the end of the year can offer several tax and strategic advantages!
Considering a Neighborhood Barre franchise? Here’s some simple insight on each benefit, along with a little strategy to help you make this one of your first and greatest #boss decisions:
Maximizing Depreciation Deductions:
Buying assets like equipment, or even the studio itself towards the end of the year allows you to take advantage of depreciation deductions for that entire year. Depreciation spreads the cost of these assets over their useful life, reducing your taxable income.
Potential for Net Operating Loss (NOL) Carryback:
If you’re acquiring a business that is generating losses, you may be able to carry those losses back to offset taxable income from the previous two years. This can result in a significant tax refund or reduced tax liability.
Year-End Expense Recognition:
You can deduct expenses incurred in the final months of the year, even if the benefits of those expenses extend into the following year. This can help lower your taxable income for the current year.
Tax Losses from an Asset Sale:
If you sell depreciated assets at a loss, you can deduct that loss from your taxable income. This may be particularly beneficial if you’re keen on replacing older assets with newer options during or after the acquisition process.
The Seasonal Sales Boost:
The fitness industry, and especially our Nb franchisees, tend to experience a surge in memberships and revenue during the end-of-year holiday season. Acquiring a business during this period can put you in a prime position to capitalize on this increased demand.
Improved Access to Year-End Financial Data:
Having access to the business’s financial data for the entire year provides a more comprehensive picture of its performance and potential. This can help you make informed decisions about growth strategies and financial management.
Early Integration with Staff and Operations:
Acquiring a business at the end of the year allows you to start working with the existing staff and integrating into the operations before the busy ‘New Year Resolution” season begins. This can help ensure a smooth transition and minimize disruptions.
Attracting Stable Financing in Time for Year-End Initiatives:
Whether you’re leveraging your own resources or utilizing a financial institution, there is generally a benefit in buying at the end of the year. The ability to get more financial support at the end of the year puts you in a position to get what you need when you need it. Sometimes this can help you when trying to obtain a loan or considering creative financing options to make things happen efficiently!
In the context of a fitness business, these benefits can be particularly advantageous and growth-focused. Fitness businesses often have fixed payroll and facilities costs while experiencing seasonal fluctuations in revenue. However, January is that time of the year when the deck is stacked in your favor! Acquiring a fitness business at the end of the year can help maximize tax deductions, take advantage of seasonality, and ensure a smooth transition during a crucial time for the industry.
So take the time you need to carefully evaluate the business opportunity, market position, and confer with your tax and legal professionals before making an acquisition decision. But don’t sleep on the opportunity of a lifetime! Becoming a fitness business owner is incredibly rewarding. In fact, few others can fully understand the how’s and why’s of the leap you need to live your dreams, but we can!
Need help with maximizing the benefits and setting you up for success throughout the acquisition process?
The entire franchising team is here for your success. We devote all of our efforts to doing just that, and are here to help you every step of the way!
About The Expert
KK is the Growth + Strategy Expert at Neighborhood Barre, a former studio owner/instructor and overall boutique fitness knowledge junkie. As a franchise, we pride ourselves on offering the most comprehensive support to help you enjoy the full ownership experience, as well as to help you make the strategic decisions you need to enjoy the business you want to create or buy! Utilize the full support of our team to help you raise the barre in your local community… You will never be just a number to us!