The Tax and Economic Benefits of Franchises
Tax season - it’s the time of year that everyone gets excited about! Okay, so that’s probably not what you are feeling. However, people who own profitable franchises often find that tax season is not such a bad thing. Many choose to make a franchise investment because they know that it is not just tax advantageous, but also positively impactful on the economy. If you want to make a meaningful contribution to the economy and community, you should own a franchise.
Taxes Are More Palatable
You most likely want to hear about how franchise ownership can help you tax-wise. As a franchise owner, you are given a leg up on the competition. In other words, you are set up for success with a business model that has demonstrated success. You are given the tools and training necessary to run your business in a way that increases the chance of great returns and owning more profitable franchises.
The proven model is a part of the reason why the initial franchise fee exists. Fortunately, under certain circumstances, this fee is actually tax deductible. The IRS has what they call a Section 197 intangible. When you own a franchise, the initial fee can fall underneath this provision as a start-up cost, which can be amortized over 15 years. This exists regardless of the length of your contract.
There are other tax advantages to making a franchise investment. You also may be able to deduct your training and travel expenses as well. If you have training expenses that are directly related to your venture, it can be considered a business expense, which is deductible. Moreover, if you have any travel that is related to the company, it can be deducted annually.
The Economic Impact When You Own a Franchise
Profitable franchises are essential to the economy. This is apparent in how the franchise industry performed during the year of 2016. Franchise businesses were responsible for almost 9 million jobs and nearly $542 billion contributed to the gross domestic product. Best in Class Education Center is a part of the franchise sector that generated $17.6 billion in payroll and $33 billion in output for the nation.
Obviously, the more jobs there are, the better the economy is. This is especially true in the fact that income taxes are the main source of revenue for the federal government. When you make a franchise investment, you are helping to fund the services that protect and assist society in general. Additionally, the payroll taxes that are paid by profitable franchises are vital to funding social security and unemployment programs. Simply put - when you own a franchise, you are helping the country run as a free enterprise system.
Best in Class is proud to be an active contributor to not only the general economy, but also the communities in which its nearly 50 supplemental education franchises are located. Franchise owners are creating jobs for the educators who are inspiring kids to become active members of society.
If you’re ready to make a difference in your life and the world, it’s time for you to own a franchise!