As you roll into your financial fourth quarter, you may be starting to look at what your tax return will look like for your business. Have you capitalized on every opportunity for tax breaks and deductions that will help you grow your business into the future?
Let SIMCO help you get the most benefit from the updated Section 179 tax rule!
If you’ve been putting off making that big drilling equipment purchase, now is the time to jump in with both feet! Through new legislation enacted earlier this year, businesses can now write-off 100% of equipment purchases made, up to a cost of $500,000. This is an amazing opportunity for small and medium sized businesses – and let me tell you why.
An imaginary example: Let’s say your company buys a piece of equipment you’ve had your eye on all year at a purchase price of $150,000. As eligible equipment under the Section 179 tax rule, you can deduct the full cost from your 2016 taxes. If we assume a 30% tax rate, that’s $45,000 less tax you will have to pay.
By taking advantage of this tax rule, you are creating a win-win scenario for your business. You pocket usable cash by way of the taxes you don’t have to pay, plus you have acquired equipment that you will use into the foreseeable future to increase your own profits and grow your business.
By purchasing now, in the fourth quarter, you can maximize your benefit even further. If you finance now, you will only make one or two payments on the loan that you get to claim 100% of, rather than a full year’s worth. Let’s say your payments are roughly $4,000 each and you only made one payment in 2016. That $45,000 tax break you keep from the full deduction of the equipment purchase is only lessened by $4,000, meaning you pocket a full $41,000 for 2016. Section 179 in conjunction with equipment financing still works at any time of the year, but because you’re only making one or two payments, your business really comes out on top right now!