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New Businesses AND EXISTING BUSINESSES should consider how they can benefit from the Opportunity Zone program

June 14, 2019

 

 

 

In a recent article in Forbes Insights, Janine Yorio, CEO and Founder of Compound Asset Management, encouraged entrepreneurs starting new businesses to consider the benefits of qualifying as an opportunity zone business, highlighting that qualified opportunity zone businesses will soon have a new potential source of equity capital from qualified opportunity funds looking for investments in these areas. Her article (https://www.forbes.com/sites/forbesrealestatecouncil/2019/06/05/thinking-of-opening-a-new-business-be-sure-to-explore-ozs-for-your-hq/) concludes:

"Therefore, if you are considering starting a business — a business that requires equity capital — you should consider qualifying as an opportunity zone business. That means basing your business in one of the designated zones and hiring most of your employees to work in that location. (There are a host of other requirements to ensure that the intent of the law is not abused, but they are not hard to satisfy if the business owner is committed to locating in an opportunity zone.) This legislation could be a windfall for young companies in these locations, and what’s better, they’ll actually create jobs in neighborhoods that need them."

The program does provide benefits to new businesses in qualified opportunity zones as Janine points out, but it also provides benefits to existing businesses wishing to relocate or expand into qualified opportunity zones. If you own a business that you hope to sell in ten or more years, can relocate the business or a part of the business into an opportunity zone, and have capital gains that you can invest in the business in the opportunity zone, you should take a close look at the program to see if you can restructure your business, or part of it, as a qualified opportunity zone business. Doing so may enable you to structure the future sale of your business free of capital gains taxes, significantly improving your return.

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