Financial well-being May 2, 2016 By
When it comes to making a big investment for a business, such as purchasing equipment, I know that some business owners might be hesitant to use their working capital and risk interfering with their current cash flow. At First United, we see it as our obligation to invest time in our customers, to understand your business so we can inform you about the implications and options of an equipment loan.
Did you know that you could receive tax deductions for purchasing new or used equipment?
The Section 179 deduction in the U.S Tax Code states that the tax deduction limit is $25,000 and the purchase limit to qualify is $200,000. This will allow businesses to deduct some of their equipment purchases when filing their taxes.
Here is a list of items that qualify for the Section 179 tax deduction:
- Equipment (machines, appliances, etc.) and computers purchased for business use Please note that equipment, vehicles, and/or software must be used for business purposes more than 50 percent of the time to qualify.
- Tangible personal property used in business
- Office furniture and equipment
- Property that is attached to the building, but not a structural component of the building (printing press, large manufacturing tools, etc.)
I encourage you to speak to your CPA to find out how this deduction would work for your business. Additional resources I recommend are CPAverify.org, which provides a national database of licensed CPAs, and irs.gov to learn details on Section 179.
What are my options when I am ready to purchase equipment for my business?
When you are ready to purchase equipment, you should first calculate the return on investment (ROI) for new or used equipment. Once you determine the right purchase, it’s time to make the right equipment financing option for you and your business.
Whether it is a tractor for your farm, kitchen appliances for your restaurant, or software for your computers, you must purchase equipment that will help you keep up with local competition while, also, preserving the cash flow that you need to keep the doors open.
Calculating ROI, finding financing solutions, maximizing your business deductions as well as all other business building needs are what we are here to help with. Dive into the links found within this article to learn more and contact me or your local First United Commercial Lender if you have questions, or if you would like to learn more about equipment capital across any type of industry.