Here are the next steps to help you get started!
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Step 1: Choose your Solar Business Name
Let us know your desired solar business name, phone number, email address, mailing address & the name of the solar business owner. Be sure to check your state’s business website to ensure the name you want is available. (No Need to structure your business entity yet!)
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Step 2: Intro to Preferred Solar Dealer(s)
Once we acquire your new business solar information, we will introduce you to our preferred Solar dealer(s). You will review and sign their Master Purchase & Sales Agreement (MPSA), which outlines what to expect if/ when you purchase solar assets from them. Once this is complete, you will begin receiving project purchase opportunities.
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Step 3: Get Started on your Material Participation
It is important to start this process immediately. Even before you purchase your first solar asset. We will ensure you achieve at least 100 hours of participation each year you acquire new solar assets. We make this turn-key and as effortless as possible for you. There are a variety of tasks to complete throughout the year within your portal that will provide more than 100 hours. They are tracked for you and a detail oriented time log is populated and provided to you at years end.
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Step 4: Solar Deal Flow Expectations
You’ll receive projects from the portfolio managers of our solar dealers. You should begin to receive purchase opportunities within 2-4 weeks of completing your MPSA’s, so keep an eye on your email inbox.
We will also prompt you when projects have been shared and will review them with you to help you in your decision making process.
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Step 5: Understanding Offer Sheets and CAMs
We'll teach you how to review the offer sheets you receive for each project, along with the supporting Credit Approval Memorandums (CAM’s). CAM’s include detail oriented underwriting documents for the projects available for purchase.
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Step 6: Securing and Purchasing Projects
When it comes to securing and purchasing projects, you will need to fund an independent escrow account. These funds remain in your control until the final purchase transaction is ready to take place.
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Step 7: Signing P1 Packet and Escrowing Funds
Once you've identified a solar project you like, you'll sign a P1 packet. This reserves the project for future purchase, removing it from the open market. You will need to fund escrow within 2-4 weeks from this point to hold the project. You are not obligated to purchase after signing a P1 packet. This is also the best time to officially launch your solar business LLC. We have a turn-key process for this as well and would be happy to do it for you.
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Step 8: Reviewing and Signing P2 Packets
The P2 document signifies the completion of the purchase transaction and secures tax benefits for the year. Funds move from escrow to the solar vendor only after you sign the P2 packet. If you decide against purchasing the project prior to signing a P2 agreement, you can release it back into the open market.
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Step 9: Understanding P3 Status
Finally, P3 status is the last stage. It's when the utility company approves energy production into the grid, marking the start of cash flow. Remember, P3 status isn't necessary for tax benefits—P2 does the job.
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Step 10: Reinforcing Active Participation Requirements
We'll continue to remind you about the 100-hour participation requirement to ensure you complete this important metric. If you do not need to use the tax credit and depreciation against w-2 or other active business income, it is not necessary, however if you do, it is essential to document your active/material participation annually and save it for your records.
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Step 11: Cash Flow Distributions
Lastly, it’s important for you to open a bank account for your solar business to receive future positive cash flow payments. They will begin quarterly after your project reaches P3 status or PTO from the utility company.
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Step 12: Tax Prep & Filing
You will receive a P&L specific to your solar project(s) from your O&M provider each year with complete financials. (Tax credits acquired, depreciation schedule and net cash flow) You will also receive instructions on how to complete IRS form 3468. We have tutorials for your CPA and are available to speak with them for additional guidance if needed. to assist with filing processes efficiently.
RINSE & REPEAT
Great news! Solar benefits are currently available within the Inflation Reduction act through 2033. Each year we will help you acquire the amount you need to optimally reduce tax. It will be important to adjust your withholdings to make purchasing solar assets easier. No need to overpay the IRS when you know you will acquire new projects within a calendar year that will significantly reduce your tax obligation!