We’ve officially hit summer in 2021, and that can only mean one thing – Section 179 financing!
Ok, that’s probably not what sprang to your mind, but that’s fine. You can have whatever you thought of (vacation, swimming pools, baseball, whatever) and still take advantage of Section 179.
There’s a reason why right now is a great time to finance a Section 179 purchase. With the year half over, if you finance equipment now, you have what, maybe 5 or 6 payments that you’ll make in 2021? Well, since you get to deduct the entire purchase price of your eligible equipment, your Section 179 tax savings will almost certainly exceed the total of the payments you make this year.
You read that correctly – you will likely save more in taxes than you pay out for the equipment this year. That makes acquiring the equipment technically a no-cost proposition for 2021. PLUS you get to use the equipment to make more revenue.
When you think about large businesses, you hear the word “leverage” a lot. Using Section 179 financing is “leverage” that’s available to any size business. The small Mom and Pop can take full advantage of Section 179 financing just as much as a multi-million-dollar entity. In fact, a smaller company might have even more leverage due to scale – proportionately, the impact to the bottom line is larger.
You can look at this a few ways: if you finance a 50k piece of equipment in June, assuming a 35% tax rate, you’ll save $17,500 on your taxes. You’ll likely pay out approximately 5-6k in payments for the rest of 2021… so that’s like 11k more in your bank account just for financing Section 179 eligible equipment.
Or, you can look at it another way – that $17,500 saved will likely cover your payments into 2023… you won’t be reaching your own pocket until then. And all that time you get to USE the equipment.
That’s serious leverage.
We’ve created a downloadable PDF that explains this in detail. It’s available here: https://www.crestcapital.com/Section-179-Financing-Deductions.pdf
So yes, it’s a magic time of year. Go to a BBQ, and go on vacation. But get that Section 179 financing purchase in also – your bottom line will be better for it.