Archive for July, 2008
Sellers are seeing their properties on the market longer and their asking prices getting smaller. Meanwhile the Buyers are having a harder time qualifying for loans, since mortgage companies are tightening their lending practices. Some Buyers and Sellers are resorting to creative alternatives. Owner financing is one of those options.
Basically there are three types of owner financing:
Promissory Note & Deed of Trust: Buyer signs a note to Seller, and a deed of trust secures the note.
Lease with Purchase Option: Buyer rents the property and can Buy it during the lease term for an agreed price. Part of the rent may or may not apply to the purchase price.
Contract for Deed: Seller enters into a contract with Buyer to deliver the deed to the property once the Buyer has paid the property completely. This can have disastrous results if the letter of the law (which changed recently) is not followed.
For more information on owner financing look for the next DickersonLaw Newsletter coming to your inbox soon or access a copy here or read my book The Road Map to Rich, available at www.theroadmaptorich.com
July 31st, 2008
This is the first year that many of us have dealt with the new Texas Franchise Tax, a.k.a. the Margins Tax. The tax on its face sounds innocent enough, just 1%. The reality as many of you have come to know is that this 1% is of your gross revenue with very few deductions (employee costs or cost of goods sold). As a result, it is possible to have a loss in the business and still have to pay the franchise tax. It has happened in certain service industries like transportation and forwarding. Some industries received some breaks, including retain, physicians and lawyers. The original purpose of the change was to bring all business entities under the tax. (Limited Partnerships and others we excluded under the prior law.)
Unfortunately as with most things the pendulum has swung to far and will need to adjust (hopefully sooner than later). I have some ideas on fixing this problem but I would like your input and comments. I intend to put together a simple plan provide revenue for the government that is equitable, without becoming an burden unfair burden on businesses.
As for my thoughts I suggest that the tax focus on the net income for the business for federal tax purposes. By doing this we can simplify preparation of the tax returns for the included businesses and allow all industries to be treated on equal footing. This will remove any bias for one industry or another, because the net amount is what is being taxed. I would also recommend a flat tax rate that would start after the first $300,000 of net income for federal tax purposes.
These are just some of my preliminary thoughts, I welcome and encourage you to comment on this blog. Your feedback is important to me. I may include your ideas or thoughts in my letter to Governor Rick Perry and the Texas Legislature. (Your anonymity can be assured is you like.) You can email me at jmd@dickersonlaw.com.
Until Next Time.
July 30th, 2008
I was in Austin meeting with clients yesterday. As we discussed setting up an new business entity we talked about the importance of a Buy-Sell Agreement between the owners. This agreement is like a business pre-nuptual agreement. It lays down the rules for what happens with the 4Ds, at the begining when everyone is happy and getting along. The 4Ds I am talking about are:
Death
Divorce
Disability
Disagreement
It is important to establish how these items will be handled if one of these 4Ds should occur.
Death and Disability can often be handled with insurance. Divorce and Disagreement require coming up with a way to buy out the partner is a way that would be acceptable to either party.
This is a very important document to put in place early on with any partnership.
July 29th, 2008
This is the first DickersonLaw blog. My business involves helping clients build and preserve wealth through estate and business planning.
Throughout the month of July I am offering a promotion for my book The Road Map to Rich. For every book purchased on my website, I will donate a portion of the profits to the Boy Scouts of America, South Texas Council, Aztec District. You can purchase your copy at www.theroadmaptorich.com.
I look forward to continuing this blog and keeping you up to date on what is going on. Before that I encourage you to look at my latest newsletter at my website dickersonlaw.com. Until Next Time.
July 18th, 2008
