Two Options to Construction Equipment Financing
If your company is looking for construction equipment financing, there are two main choices, loan or lease. Business owners need to weigh all options when it comes to obtaining financing for construction equipment. Both options have their merits and their drawbacks.
Construction Equipment Purchased Using a Business Loan to Buy
Heavy construction equipment does not become obsolete during the life of the equipment. Construction equipment is very durable. With proper equipment maintenence, heavy duty construction equipment will last for years past what a lease would offer.
Also once the business loan is paid off, the business owns the equipment. The business gains collateral as it builds accrued equity. This can be very valuable for future financing on the business credit. Equity built used in the collateral gained can be used to obtain working capital in the future. Keep in mind however, that unsecured business lines not requiring collateral are available for businesses needing the extra working capital. Furthermore, the equipment that is bought can be counted on taxes as depreciation.
The Benefits of a Leasing Construction Equipment
The primary benefit of leasing construction equipment is that it offers great tax benefits to business owners. This is particularly true in a "true lease" where there is 100% deduction on taxes. If you do not know what we mean by a true lease, the Internal Revenue Service uses the term "true lease" to define how it is structured.
The thing about a true release is that the business owner can claim the entire lease payment off on business taxes, For your equipment to qualify for this status, it should be declared at fair market value when the lease is up. Also, it is a good idea to speak with a professional tax consultant for more details.
Most business owners like the idea of using a lease because you can get the equipment without a down payment or very little at all. So this eliminates the upfront costs involved in buying your own equipment outright. Business startups especially like using a lease agreement. It just makes sense. Lease payments are typically fixed for the term of the lease and give the business owner a good idea what to budget.
Make Plans to Succeed in Your Construction Business
As a business owner, there are a lot of things to think about when obtaining construction equipment financing. One of things is the method of payment and how it affects you financially with taxes and everything else. Make sure you check the all angles and consult with a tax consultant Plan ahead, and you will do fine with your construction business!
Construction Equipment Purchased Using a Business Loan to Buy
Heavy construction equipment does not become obsolete during the life of the equipment. Construction equipment is very durable. With proper equipment maintenence, heavy duty construction equipment will last for years past what a lease would offer.
Also once the business loan is paid off, the business owns the equipment. The business gains collateral as it builds accrued equity. This can be very valuable for future financing on the business credit. Equity built used in the collateral gained can be used to obtain working capital in the future. Keep in mind however, that unsecured business lines not requiring collateral are available for businesses needing the extra working capital. Furthermore, the equipment that is bought can be counted on taxes as depreciation.
The Benefits of a Leasing Construction Equipment
The primary benefit of leasing construction equipment is that it offers great tax benefits to business owners. This is particularly true in a "true lease" where there is 100% deduction on taxes. If you do not know what we mean by a true lease, the Internal Revenue Service uses the term "true lease" to define how it is structured.
The thing about a true release is that the business owner can claim the entire lease payment off on business taxes, For your equipment to qualify for this status, it should be declared at fair market value when the lease is up. Also, it is a good idea to speak with a professional tax consultant for more details.
Most business owners like the idea of using a lease because you can get the equipment without a down payment or very little at all. So this eliminates the upfront costs involved in buying your own equipment outright. Business startups especially like using a lease agreement. It just makes sense. Lease payments are typically fixed for the term of the lease and give the business owner a good idea what to budget.
Make Plans to Succeed in Your Construction Business
As a business owner, there are a lot of things to think about when obtaining construction equipment financing. One of things is the method of payment and how it affects you financially with taxes and everything else. Make sure you check the all angles and consult with a tax consultant Plan ahead, and you will do fine with your construction business!
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Need financing for your construction business? Wall Street Capital Financing can help! Read more at Financing Construction Equipment.
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