This is the time of year when experienced business owners pause to assess how their business performed during the year and to review their projections for the fourth quarter. If your business is profitable and growing, this may be a prime time to invest in needed equipment while taking advantage of significant tax benefits under Section 179 of the U.S. Tax Code. While business owners should consult the specifics of their eligibility with their finance and tax experts, here are a few things to know about this potential tax benefit.
Section 179 incentivizes asset acquisition for profitable businesses, which typically take advantage of this provision during the fourth quarter because the tax benefits are only accessible if the business is profitable. Once a business owner has a clear line of sight to profitability, they can look at their growth projections for the coming year or several years to determine the equipment that will help their business reach its goals.
Profitability is important for taking advantage of Section 179 because the benefit comes from an accelerated depreciation schedule – in short, businesses can typically expense the cost of the equipment rather than capitalizing it and depreciating it over several years. Again, it is important to consult a tax expert to fully understand how this might work for your business.
How can Scale Bank help you reach your goals? We offer specialized equipment financing. The right approach to financing can put equipment that takes your business to the next level within reach. We have the experience and expertise to find an equipment financing structure that aligns with your business needs, including up to 100% financing. For businesses whose equipment needs and utilization are more seasonal, like construction, deferred loan payments may be an option to align business cash flow with the debt obligations. In addition, we recognize that the purchase price of the equipment may not be the full cost of getting it operational in your business. Equipment financing can include support for implementation costs to ensure that you are maximizing the benefits of your newest asset.
As an equipment financing professional, I am seeing these trends in equipment purchases this year:
- Continued tightness in the labor market has customers looking at automation tools to ease repetitive but critical tasks to maximize the workforce already in place or to complete essential tasks that they haven’t been able to hire for.
- Despite slightly higher interest rates, companies are finding efficiencies in upgrading older equipment. Benefits from equipment upgrades might include additional product features to make doing work easier or a smaller machine footprint to allow more space for other equipment work activities, or even the ability to reduce square footage and save on rent!
- Businesses are also planning for next year. As they budget for the year ahead, customers look at timelines and investments to ensure they can be in an advantageous tax position. We can support this planning by offering pre-approvals for certain equipment purchases, which puts our customers in a stronger position to negotiate with suppliers on purchase price when the time comes.
If your business can’t utilize Section 179 benefits but you need to invest in equipment to meet next year’s growth goals, we have financing options for that too. It is still an opportune time for smart capital investments. One option might be a lease from the bank that allows us to pass on the depreciation savings to the customers. We can work with businesses in a variety of financial positions to access the equipment and financing they need for continued growth.
Because we’re committed to getting to know you and your business at Scale Bank, we can offer tailored solutions, quick decisions, and ongoing consultation to keep your business growing.
Contact one of our experienced equipment financing and leasing experts – https://scale.bank/specialty-funding-equipment-leasing-roi/