Now is the time to start prepping your business personal property listing form. When you receive your 2021 listing form in January, there’s only a short window to turn it around. For many businesses, this isn’t enough time to thoroughly review and update your business assets.
If your business has substantial personal property, there could be significant tax savings by paying attention to your listing form and tax bill — and considering an appeal. In our current economic climate, businesses can’t afford to overlook this and potentially overpay year in and year out. We recently released the NC Guide to Business Personal Property Tax to help guide you through the complex, often messy topic of business personal property.
Here are 5 things you can do now to get your business personal property prepared for your 2021 listing form:
- Review Your fixed asset schedule to make sure assets that have been disposed of or taken out of service are removed. Otherwise, you may be paying tax on assets that you no longer own.
- When you prepare your business personal property listing, make sure it “syncs” with your fixed asset schedule. Otherwise, you are at risk of a discovery audit and assessment of additional tax and penalties.
- Make sure you properly categorize capital expenditures as real estate, rather than personal property, where appropriate. In doing so, document your analysis so you can support your categorization of real vs. personal property.
- Prior to year end, review your construction in progress (CIP) account and recategorize CIP expenditures to other capital accounts, as appropriate. CIP never depreciates, so each dollar of CIP increases your tax value by a dollar. Other assets depreciate over time, thereby reducing tax value.
- Ditto the above regarding supplies. Scrub your supplies account prior to the year end to make sure you are not paying tax on “ghost supplies.”