Transferring Personal Assets to MY Business

Discussion in 'Business Operations' started by Darryl G, Apr 1, 2002.

  1. Darryl G

    Darryl G LawnSite Fanatic
    Posts: 8,138

    Does anyone know how to go about transferring my personal assets such as mowers, truck, landscape tractor to my new business (and LLC). Do I actually sell them for $ or just assign them to the business with a value? It would seem silly for me to take $20,000 out of my personal account to put it in my businees account so that I could buy my own tractor from myself. Do I need a bill of sale or something. I'm sure my attorney could tell me for $125 but thought you guys might know.

    Thanks in advance
     
  2. landscaper3

    landscaper3 LawnSite Bronze Member
    Posts: 1,354

    Get an accountant! If not done to the book the IRS can be you biggest nightmare!!!!!!
     
  3. John Allin

    John Allin LawnSite Bronze Member
    Posts: 1,489

    If you're big enough to consider an LLC, and big enough to consider moving assets - you're large enough to afford an accountant.

    Leave the intricate stuff to the experts...... That's what you're asking your customers to do.......
     
  4. bruces

    bruces LawnSite Senior Member
    Posts: 648

    Very good point.

    From a tax standpoint, if they have been personal assets (non-business use, maybe just used around your own property, etc) they could be transferred to business use by just starting to use them for business. Your basis for depreciation will be the lower of cost or fair market value at the time of conversion to business use.

    In other words, if you bought a mower for $5,000 2 years ago for personal use and it is worth $2,000 when you convert it from personal to business use, your basis for depreciation will be $2,000.

    If you are a sole proprietor (or one person LLC), you don't have to do anything formal, you and the business are one and the same. If a partnership or corporation, you have an entirely different scenario.

    Like John said, consult an expert, if you have a tax advisor, talk to them, if you don't you need one. They should save you money and problems.
     
  5. Darryl G

    Darryl G LawnSite Fanatic
    Posts: 8,138

    I've got an accountant; the hard part is trying to get his ear this time of year. I'll bring it up when we go over the quarterly taxes next week. Bruces is right, the equipment was for use on my property but I'd like to be able to depreciate it. The tractor is mostly used for brush hogging along the roadways and for revegetating this old gravel pit I live on.
     
  6. parkwest

    parkwest LawnSite Senior Member
    Posts: 678

    What would be the benefit of transferring your equipment to your business. Do the smart thing. Keep them in your possesion and lease them to the business at fair market rental value. Covers you on both liability and tax issues if done correctly.
     
  7. Fantasy Lawns

    Fantasy Lawns LawnSite Bronze Member
    Posts: 1,913

    remember if you use your personal truck for business your able to keep a mileage log n take .33 cents per mile for gas, fuel, wear n tear .... lot's of tax considerations do need the CPA
     
  8. bruces

    bruces LawnSite Senior Member
    Posts: 648

    Actually, the mileage rate is 36 1/2 cents for 2002. It was 34 1/2 for 2001.

    QUOTE FROM PARKWEST

    "What would be the benefit of transferring your equipment to your business. Do the smart thing. Keep them in your possesion and lease them to the business at fair market rental value. Covers you on both liability and tax issues if done correctly."

    Depends on type of entity. If a single person LLC, it probably won't matter, it is still the individual. If a corp or partnership, might or might not be good. Best thing is to get professional advice so that what you do fits your situation.
     

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