Warning! Save cash, lessen expenses
Business owners can preserve their cash and lessen the risk of buying new equipment with an equipment lease and avoid scams. Rather than making a lump sum payment and using a huge amount of working capital, a construction equipment lease simply obliges secure monthly payments. Furthermore, leased equipment does not show on the assets or liabilities columns of corporate balance sheets on the other hand instead as an operating expenditure on income statements. Having little or no liabilities will make a balance sheet look sturdier. By not possessing the construction equipment, business owners decrease the danger of having to preserve the equipment and consider its scrap price or resale value. The equipment can be managed as normal and simply be given back at the end of the lease term.
Maintain business credit
One more advantage of leasing for construction companies is that it maintains business credit. When the time comes for you to enlarge your business, or apply for a construction business loan, you must have a strong credit score. An equipment lease will not drop your credit, and it aids to reinforce your company’s cash flow. Regular fixed payments are made till the end of your equipment lease period and, if paid on time, can even aid your company’s credit. And another great thing about this is you can keep away from future complaints.
Generous tax deductions
Section 179 is a tax deduction that every business owner, particularly those in the construction industry, must know about. Since construction business owners work with many kinds of heavy equipment, lots of them take advantage of this tax write off. The present Section 179 Tax Deduction permits you to write off up to $500,000 of qualifying new or used construction equipment. For example, you have a construction of a new building in Jakarta Indonesia, you lease a new bulldozer valued at $50,000, and your cash savings (assuming a 35 percent tax bracket) is $17,500. The total cost for the bulldozer, after tax savings, is $32,500.
Systematically comprehending how an equipment lease modifies your financials is significant and will help your construction business grow and succeed. So review each aspect of your business and never rush onto making decisions.
