Tag: agriculture

As a Norfolk small business owner, there are a lot of responsibilities that you have to juggle. Dealing with accounting and bookkeeping only adds to the stress and can be an extremely challenging space to navigate. This guide will help you learn about different business accounting services that are available and useful for different industries to help you navigate your small business accounting more effectively. Let’s dive in!

Table of Contents

1. Business Valuation Services: How Do You Compare to the Competition?
2. Business Valuation Methods for Optometrist Practices
3. What Is Land Depreciation, and How Can You Take Advantage of it?
4. Purchasing a Farm: Land Depreciation vs. Amortization
5. How to Improve Your HVAC Business With Productivity Consulting
6. A Business Owner’s Introduction to Cost Segregation Studies

Business Valuation Services: How Do You Compare to the Competition?

Business valuation services help you prepare for the future and understand the health of your organization. They help ensure your business stays viable and give you a plan for potential future decisions. 

What Are Business Valuation Services?

A business valuation is the process of evaluating the economic value of a company. Business valuation services come into play to find the true value of a business due to several reasons including:

• Determining the value during a company sale.
• Estate planning to determine how your business will be treated as part of your estate. 
• During any court case.
• When you are planning to bring in other potential partners.
• When putting in a strategic plan for the future. 
• During the process of acquiring capital from investors.

How Is a Business Valued?

There are multiple factors that go into the business valuation. These typically include:

• Net assets. 
• The market value compared to peers.
• An analysis of cash flow.

To learn more about what a business valuation is and how it is conducted, read this comprehensive article that will tell you everything you need to know about business valuation services.

Business Valuation Methods for Optometrist Practices

Many optometrist practices are either unsure of what their business is worth or utilize the wrong valuation techniques, therefore, having a false understanding even though having a proper valuation is a crucial component of a healthy retirement plan. Here are some ways to plan ahead and make your business more valuable. 

EBITDA

EBITDA stands for earnings before interest, taxes, depreciation, and amortization and is a comprehensive measure of a business’ worth. Buyers will typically want three to five years of history to see what the overall trend of the business is and if it’s trending upward. 

Tracking your company’s EBITDA over multiple years will put you a step above most of your competition and can highlight how well your company has been doing in comparison to the industry standard. 

Breaking Down Multiples

Once the numbers are compared to the benchmarks, the industry, and other similar practices, then EBITDA tends to come into play to where a “multiple” is applied. A multiple is a runway of time. This is the amount a buyer is willing to pay for a business based on EBITDA, typically anywhere from two to nine times EBITDA, as the multiple. 

To break it down further, this means the buyer is willing to pay two to nine years’ worth of earnings the practice has generated. 

Why Are You Selling?

It is essential to understand why you are selling in the first place. If you’re still having fun or if you still feel that the future of your company is extremely positive, then I want you to take a step back and just do a soul search to determine if this is the right decision of going down the road of merging with a practice or selling.
Understanding the value of your business will help you understand its health. It can help you make big decisions for your future and determine when the right time to sell is. For more information about business valuation methods for optometrist practices, read this blog.

What Is Land Depreciation, and How Can You Take Advantage of it?

Another option for ensuring you are receiving the largest ROI on your land is to take advantage of land depreciation. In this instance, the IRS allows you to allocate the depreciation cost over the life expectancy of an asset.

When Does Land Depreciate?

Land does not have a defined useful life, making it nearly impossible to account for depreciation. And depending on certain factors, its value may either rise or fall over time. Although land cannot necessarily be depreciated, certain altercations you make to it can be. Some examples include:

• Paving
• Building fence
• Outdoor lighting
• Filling a wasteland with soil to make it usable

To properly account for land improvements, a business needs an account entry in the general asset ledger. Any improvements that you make will debit your expense account and credit the land improvements account.

Why Would I Want to Account for Land Depreciation?

The main reason you would want to account for land depreciation is that it helps you make and save more money. It can also help display aspects causing the expansion of your business. 
Land depreciation can be a confusing topic to fully understand. For more information on it, check out this informational article.

Purchasing a Farm: Land Depreciation vs. Amortization

From a high-level view, purchasing a farm may seem like a good investment. However, the net return is often much lower than originally anticipated. To counteract this, there are certain items you may depreciate or amortize to gain back some of that return. 

Amortization vs. Depreciation

When you purchase a farm, you also gain multiple assets that will deteriorate over time. Oftentimes, their cost can be expensed based on that life expectancy. You can do this in two ways:

Amortization

Amortization is a way to calculate the total cost of an asset over its useful life. However, amortization is used for intangible assets, unlike depreciation. 

Depreciation

Depreciation is a way to calculate the total cost of an asset over its useful life. It is used to establish the cost of obtaining the asset compared to the income it provides. Depreciation is used for tangible assets. 

Depreciating Farm Assets 

The most common depreciating asset on a farm is specific structures that may be deteriorating. Some of these structures may include fences, grain bins, farm sheds, irrigation systems, and other tools and equipment. Having the ability to write off these assets when tax season rolls around will help you offset the amount you are paying for the farm. 

Amortizing Farm Assets

In certain circumstances, you can count dirt on a farm as an amortizing asset. To do so, the first step is to determine if there are more fertilizer nutrients in the ground than what is considered average. To check the levels of your land, you can hire an agronomist to collect soil samples from areas around the farm to analyze the nutrient values.

After a sample is collected, you’ll need to compare it to the average in your area. If you have any values that are above average, you can typically amortize your soil. 

To read a more in-depth analysis of depreciation and amortization when purchasing a farm, please take a look at this helpful guide. 

How to Improve Your HVAC Business With Productivity Consulting

Ensuring that your HVAC business is functioning at its highest level of production is essential to preparing for the future. With all of the moving pieces that accompany this industry, it is crucial that everything is working as efficiently as possible. 

What is Productivity Consulting

The National Association of Productivity & Organizing Professionals (NAPO) defines the role of productivity consultants as the support for “evaluation, decision-making, and action around time, energy, and resources; helping clients achieve desired outcomes regarding goals, effectiveness, and priorities.”

A productivity consultant can help your business target areas where it can increase productivity. They will evaluate your current processes and help you create a plan to increase productivity and efficiency in the areas that need help. 

How Productivity Consulting Will Improve Your HVAC Business

Productivity consulting is especially beneficial for HVAC companies because each job requires a certain process to be done correctly. They can help you increase productivity for:

• Vehicle Prep
• New Equipment Purchases
• Implementing New Technology

A consultant can take planning and organization off your plate so you can focus on other areas of your business. To learn more about how a productivity consultant can help your business, read this article.

A Business Owner’s Introduction to Cost Segregation Studies

Starting a small business is challenging and the majority have to close their doors because of a lack of cash flow within the first year. One solution to this problem is cost segregation. A cost segregation study usually results in greater tax savings and financial leniency for businesses. 

What Are Cost Segregation Studies?

A cost segregation study refers to the process of splitting elements of a property into categories for tax reporting purposes. Essentially, the study accelerates depreciation so that the owner can take out a higher tax deduction immediately. 

The process of a study includes:

• Analysis of what your benefits may be
• Gathering of essential documents
• Property examination
• Full report produced with results

Benefits of a Cost Segregation Study for Small Business Owners

The greatest benefit of a cost segregation study is alleviating some of the financial burdens that fall on new businesses. Additional benefits can include:

• Various properties may be studied
• Different benefits for different depreciable assets
• Uncover additional saving opportunities
• Reduce the cost of expensive equipment

For more information about cost segregation studies, read this all-inclusive guide to cost segregation studies.