Posts Tagged "business equipment"

Should you lease or buy business equipment?

Posted on Jun 20, 2011

It’s not easy to decide whether it’s wiser to buy or lease a piece of business equipment. For most business owners, the first impulse is to buy. But there may be times when leasing is preferable.  * Capital conservation. Purchases normally require a 10% to 20% down payment, whereas equipment leases require a smaller down payment. Additionally, “soft costs” such as shipping, installation, and warranties can be built into the lease.  * Obsolescence. If the equipment becomes obsolete before the end of its useful life, leasing the equipment may allow for a “turn back” or upgrade at the end of the lease, thereby keeping the technology current and minimizing repair and replacement costs.  * Urgency. For expensive equipment that is required immediately, leasing might be the best way to obtain it quickly. If you purchase, you might be tied up with your lender for some time, providing financial statements necessary for loan approval.  * Deductions. If you find that you’re unable to expense the equipment, a lease might allow for a shorter deduction period compared to depreciation.  Sold on leasing? Don’t be. Buying has its advantages also.  * Immediate deduction. You may be able to immediately deduct up to $500,000 of the cost of qualified equipment in the year of purchase, using the first-year expensing rules. That’s significant and can reduce your taxes substantially.  * Appreciation. Some equipment actually increases in value over time. Buying such equipment can create future wealth.  * Useful life. The equipment may be valuable and productive long after the lease has expired. Purchasing will allow you to continue to use that equipment and avoid the need to return or upgrade it at the end of the lease term.  For help in deciding whether to lease or buy, give us a...

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Act fast if you want to cut your 2010 taxes

Posted on Dec 7, 2010

1. Tax rates are likely to go higher in 2011, so you might benefit from shifting income into 2010 and delaying deductions until 2011. It’s always a matter of personal circumstances, so analyze the two-year results of shifting income and deductions before you do anything. 2. Remember that required minimum distributions from retirement plans are back this year. If you’re over 70½, your 2010 distribution must be taken by December 31 or a 50% penalty may apply. If you turn 70½ this year, you could wait until April 1, 2011, to take your first distribution. In deciding, consider the likelihood of higher tax rates next year and the fact that a delay means you’ll have two taxable distributions for 2011. 3. With the $100,000 income limit dropped for converting a traditional IRA to a Roth, consider doing a conversion before year-end. You can elect to pay the tax over two years’ tax returns, 2011 and 2012, or pay in full on your 2010 return. 4. Consider buying needed equipment for your business to benefit from the first-year $500,000 expensing option and 50% bonus depreciation. 5. If you’re planning to add employees soon, do so before January 1, 2011. If you hire someone who has been unemployed for a while, you might qualify for an exemption from social security payroll taxes on the new hire’s wages. Keep the new worker for at least a year and you could also qualify for a tax credit of up to $1,000. 6. Start a pension plan for your small business. You may be entitled to a credit of up to $500 in each of the plan’s first three years. 7. Review your portfolio and start thinking about offsetting gains and losses for the year. You can deduct $3,000 of losses against ordinary...

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