One, always talk with the proper professionals like attorneys and CPAs before taking action. Do not make any decision based on this exchange of information.
With that said, there are a number of smaller variables but only two basic ways to structure ownership of a childcare business component and its real estate. The childcare business and its associated real estate can be owned by the same entity or they can be owned by two separate entities. In most cases, the business component is owned by one company and the real estate in another company. This structure allows for the following benefits:
1. As the real estate holding company (typically an LLC) will lease the real estate to the childcare business company, you have the ability to control or adjust the amount of the rent paid by the childcare company and received by the real estate company. This structure can be very helpful during tax planning.
2. Owning the business component and real estate in separate corporations can protect real estate holdings in the event someone sues the childcare company. While we live in a great country, we also live in an incredibly litigious country. You can’t be too careful.
Contact us if you have any questions about structuring your childcare and its real estate.
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All the best,
Brad Barnett
President, BFS®
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