Here we are, well into September, and we’re staring the fourth quarter of 2018 right in the face. And now that the third quarter is coming to a close, where are you on your Section 179 spending?

To be honest, there is no good reason to not be completely bullish on Section 179 as we cruise through September. In fact, I can think of (literally) a million reasons why you should be taking full advantage of it. That’s because, as you likely know, Section 179 is a cool million dollars for 2018. That’s a number that can really make a difference for companies. I’m not saying you need to go buy a million dollars’ worth of equipment to make it all work, but the fact is, most small and medium businesses can buy as much as they like, and not worry about hitting a limit. That’s pretty reassuring.

Here’s another reason. Right now, at the end of Q3 2018, the economy is humming along. It’s good business sense to use these “good times” to fortify your position, to update and improve your capabilities, and not only keep up with the Jones’, but surpass them. If you’re thinking of being bold, you have a robust Section 179 to back you up.

Two more reasons, both related to Section 179 equipment financing.

The first is the fact that if you finance equipment right now, you will almost undoubtedly reap a bigger tax savings for 2018 than the total of the payments you make in 2018. Yes, that means financing equipment at this time of year and taking the Section 179 deduction is actually an “in the black” move.

The second is interest rate hikes. One is imminent this month, and there is talk of another in December. If you haven’t already, you should get in before that happens. Not only do you get the benefits listed above, you also save money by locking in. Trust me, rates aren’t going down anytime soon, so solidify your position right now.

The 4th quarter is looking good folks. I’m optimistic.

This is one of my annual posts about what’s “hot or not” in the world of equipment financing. I could start with the obvious joke that Fletch himself is always hot, but Mrs. Fletch always laughs at me when I go on that tangent, so I’ll refrain.

Ok, let’s talk about what’s hot in equipment financing. And at the risk of sounding incredibly boring or simplistic, I can sum it up in one statement – just about everything is hot.

Really, I’ve been in the equipment financing and equipment leasing business for close to thirty years, and I have never seen a small business climate quite like the one I am seeing right now. Almost regardless of industry, most established small businesses are doing well. I say “almost” regardless of industry, because there are few sectors not doing so well, but I’ll discuss those in my next “not hot” post (and to be honest, they are pretty obvious).

But yes, almost everything is hot in equipment financing. Here are a few reasons (I think) why:

1. Favorable Business Regulations – This is about as close to politics as I’ll get, but right now, small businesses feel as though the government is going to stay out of their way. That always helps.
2. Lower Taxes – The Tax Cut and Jobs Act signed in December 2017 has definitely helped businesses, and despite some negative press about stock buybacks and such, Fletch sees firsthand the increase of small businesses investing in themselves.
3. Robust Section 179 Deduction – The same The Tax Cut and Jobs Act increased the Section 179 deduction to One Million Dollars. That’s double what it was last year. This has definitely encouraged businesses to buy more equipment in 2018.
4. Experience – Most businesspeople know the economy is cyclical, and while these good times seem like they will last, smart businesspeople strike while the iron is hot. Kind of a “we have the funds now, so let’s improve” attitude. It’s healthy.

The above all combine to create a “just about everything is hot” in equipment financing in 2018. Hopefully, your industry is doing well too, because it’s a great time to be in business.

Personally, being in the industry, I believe the former over the latter. In my experience, businesses are investing in themselves, and I do believe that it’s partially due to the lower taxes the Tax Cut and Jobs Act brought about.

And this brings me to mentioning Section 179 again, because it’s aligned to form the perfect financial storm this year. And, like a hurricane, I’m even naming that perfect storm – “The 2018 Tax Cut and Section 179 Double Dip”. And it works like this:

Most businesses got a healthy tax cut, and find themselves with more funds than they expected to have. This is a great thing. And many of those businesses are using this money saved on taxes to reinvest in themselves by buying new (or new to them) equipment. That’s the first half of the storm.

But like a hurricane, the path can often circle back and hit again. This is the second half – businesses who used the tax savings to buy equipment can now deduct the full price of that equipment using Section 179 (which was raised to one million in the Tax Cut and Jobs Act). So they get to keep more of their money, which means they are technically double dipping (in a good way). They get tax savings, and use those tax savings to get MORE tax savings. Plus they get the new equipment. It’s win / win / win.

I’ve been writing this blog for more than a decade, and I’ve never seen a better time than 2018 to buy new equipment and use Section 179. It’s the perfect storm, and you should take advantage of it before it blows away.

I’ve recently written about the strong small business economy, and improving your company. But I realized my thinking was somewhat limited in what I was suggesting.

For example, I was discussing adding machines, trucks, etc., and combining such with equipment financing and Section 179. Now, while those are perfectly good ways to improve your business, a strong economy, combined with excellent equipment financing rates and a robust Section 179 deduction can mean improving your company in some less “obvious” ways.

To give an example, is your business one that has a waiting area, either for customers or corporate visitors? How is that waiting area looking these days? Can it use some freshening up? I’ll bet it can, because a waiting area is not something that is directly tied to revenue, so it doesn’t get thought of very often. Yet it will influence how your company is perceived, and ultimately will be reflected in the bottom line (albeit indirectly.) Some new seats, couches, and televisions / vending machines can make a big difference, and right now is a great time to do this.

Conversely, your company’s exercise area (if you even have one) is a place that could probably use an update. And if you don’t have one, now is the perfect time to put one in. Study after study has shown this not only helps in overall employee happiness, but it also has a positive effect on your employees’ overall health. And happy, healthy employees better contribute to your bottom line.

Employee lounge / break area / cafeteria – again, these are areas that don’t directly tie to revenue, so sometimes they get pushed aside. But these are great company upgrades to make when revenues are strong and equipment financing rates are low. Plus, most of this equipment qualifies for Section 179, meaning you can deduct the entire cost.

So yes, improving your company doesn’t always mean buying new production machines. An exercise room and a vending machine (that hopefully sells healthy snacks) are improvements that can pay dividends for years.

In my last post, I reported that small business optimism is at an all-time high. And now I want to discuss a point that all businesses should take into consideration during this excellent wave of optimism and confidence.

It’s pretty obvious, but it’s always worth repeating:  it’s time to improve your company. Experts will suggest that any time is a good time to make improvements and invest in your company, but right now, it’s at “no-brainer” levels. When companies are doing well, they tend to look inward and see how they can get better. Your competition is definitely doing that, and you don’t want to be left out.

Improvements can take several forms, the most popular being personnel and equipment. A new key hire can make a big difference, and buying new (or new to you) equipment can be an investment that pays off for a decade or more. And since I’m an equipment financing guy, I’ll talk about the second point here.

Buying new equipment can expand your current offerings, and make operations much easier today. For example, adding a new production machine or delivery truck helps you right now with more revenue.

In addition, improving during this wave of optimism can also allow you to take advantage of new technology. Is there a new, more efficient software system out there? Or maybe a new production technology you’ve thought about adopting? Now’s the time.

Improving today also helps you for tomorrow – the preverbal “strike while the iron is hot”. If you improve your business now, when times are booming, you will be in a much stronger position when the inevitable pitfalls happen (and you’ve been in business long enough to know there are always pitfalls, right?) Riding a good wave is meaningless if you don’t use that wave to strengthen yourself.

Which leads me to another point – you CAN have it all – new equipment and money in the bank. If you finance equipment instead of paying cash (while also taking advantage of Section 179), you can spread the payments out over several years. This allows you to get equipment right now, which hopefully increases your revenue even more, yet make small payments over time.

So if your revenue increased over the last year, and you further improve yourself to make more revenue, but are making monthly payments instead of paying in full, you can also steadily increase your cash reserves. It’s a complete win-win.

There’s no downside whatsoever to improving your business right now. Because the last thing you want is to look back a year or three from now and say “I should have bought it then.”

One more post about using Section 179 to sell more. You can read part one

These strategies are a little more advanced than what I talked about earlier (which boiled down to more or less “talk about it more / get it on your website and marketing collateral”). The following three strategies are for companies that really want to sink their teeth into Section 179 and use it to help close more sales.

#1 – Use Section 179 Calculators

Go ahead and search online for Section 179 calculators – you’ll get good ones right away. When you are sitting down with your prospects, use these online calculators to show your prospect, right there in black and white, how much they can save on their taxes. This has a very positive effect on buyers, especially if you have creative salespeople who can utilize this savings into a “true cost of the equipment” close.

#2 – Create Section 179 Worksheets for Your Products

Take the preceding one step further and make a “Section 179 Savings Worksheet” for your salespeople to use.  Use the above-mentioned calculators yourself, and figure out the Section 179 savings (most calculators will assume a 35% tax rate.) Then get your marketing/graphics team to make a nice worksheet that takes clients step by step through the price, how much tax they can save, and subtract the savings from your product’s cost, arriving at (again) the true cost of ownership. Since many businesspeople are not aware of Section 179, seeing this right in front of them is powerful.

#3 – Show Actual Savings on Your Website

You can do the same thing for web shoppers. Along with the Section 179 banner I mentioned in my last post, you can show the tax savings right on your website along with the item’s price. Of course, make sure that you mention these are Section 179 savings and not your own discount. Linking to the calculator you used is prudent as well.

Section 179 is a robust one million dollars for 2018, and it can be a really powerful sales tool if you use it correctly So get calculating, and get selling!

In my last post I talked about using Section 179 to sell more equipment, and focused on the fact that many business owners simply aren’t aware that Section 179 even exists. Let’s take that one step further and talk about a few specific strategies that can help equipment sellers sell more using Section 179.

#1 – Make Your Buyers Aware of Section 179

The first step is to make buyers aware that Section 179 exists. This can be in the form of website articles, blog posts, newsletter blurbs, Facebook posts, or similar. You need not even research or write in depth articles – a quick Facebook post with a link to a Section 179 informational site will work fine (simply search Google for Section 179 – you’ll have good informational websites within the first three results).

The bottom line is to start talking about it in your social media / blog / newsletter / other marketing.

#2 – Get Your Salespeople to Start Talking about Section 179

If you have salespeople, and they aren’t talking about Section 179 with every prospect, then listen up, because I’m about to make your next sales meeting the most beneficial (and profitable) one you’ll have this decade. Every single salesperson, on every single sales call, should be talking about the FULL PRICE DEDUCTION the prospect could take using Section 179. This is a powerful tool. Creative salespeople can even talk price, using Section 179 tax savings to overcome a price objection.

To give an example, a $10,000 piece of equipment has a net cost of $7,500 if you factor in taking the entire $10,000 as a deduction (this assumes a 25% tax rate. If the tax rate is higher, the savings are even more).  Tell your salespeople they can talk about a 25% cost reduction, and watch their eyes light up.

#3 – Get Section 179 Into Your Marketing Collateral, and On Your Website’s Product Pages

You can find Section 179 banners and icons online (again, simply search). Put these on your marketing collateral and website, and let prospects know a particular piece of equipment is Section 179 eligible. Like I mentioned last post, who cares if your competition can do this too? They aren’t reading ol’ Fletch – you are.

One more post on this topic next time, with a few more advanced strategies.

Ok, the dust has settled, the holidays are over, and I have some time to discuss Section 179.

As I mentioned in a post a few weeks ago, Section 179 got a big boost from the Tax Cuts and Jobs Act. But I felt like I had to write about all of the major business aspects of the act, and Mrs. Fletch had all kinds of holiday plans as well, so Section 179 got a paragraph. But now I have a moment where I can sit back and take in all that happened with Section 179, and share it with you.

The title of this post emphasizes how extraordinary this is. The Section 179 deduction was not only given an increase – it literally doubled in size, to one million dollars. This is a massive boost, and will really help a lot of small and medium sized businesses, because they can now write off a million dollars’ worth of equipment for the year. If we assume a tax rate of 25%, this could knock a net of 250k off the tax bill – the sheer size of the numbers is really exciting.

Further, the “cap” of total equipment purchases was raised to $2.5 million before the deduction starts to phase out on a dollar to dollar basis. Another change is certain improvements to non-residential property can now be written off.

Lastly, the “bonus depreciation” (which is usually taken after Section 179 is used up) has been raised to 100%, and now includes used equipment as well (Section 179 itself has always allowed for used equipment).  That’s a nice little bow to wrap things up.

These changes are coming at the opportune time as well, because the economy was strong last year. So I’m sure companies will use 2018 to really “gear up”. This is good news for everyone – companies that make equipment, their employees, the towns they are based in, etc… everyone benefits when businesses buy equipment, and 2018 should be a banner year for this. Maybe even the best ever.

Get your equipment financing lined up, and get shopping, because Section 179 is HUGE.

Here we are in 2018, and you know what that means: another edition of Fletch Predicts!

I always do sports, and I was on a roll for a while. I predicted basketball and baseball right in 2016, and then I nailed the 2017 Superbowl – three in a row! Things were really looking up, but then I crashed back to earth, and haven’t hit on anything since. But that never deterred me – let’s get to it for 2018.

Starting with the Superbowl – there are a few teams that look strong: you have the Patriots, who are always there. The Eagles are surprising, and they may have an old NY Giant vibe, when a backup quarterback named Jeff Hostetler led them to a Superbowl win against the Bills in 1989. Can Nick Foles do the same for Phili?

But I’m going with an unconventional pick. I like the Minnesota Vikings to become the first team to play the Superbowl on their home field. They will play the Pittsburgh Steelers in a rematch of the first Superbowl a young Fletch watched start to finish! And this time, the Vikings will win!

Hockey – to me, that’s the hardest sport to predict, because it all depends on momentum and the hot goaltender. Right now, the Tampa Bay Lightning look very strong. Let’s go with them.

Basketball… I like the Houston Rockets to make a big leap, and grab the title. They will play the Celtics in the finals. LeBron finally gets to rest in late spring.

Baseball – all NY Yankees, all the time. They already had a modern day Murder’s Row brewing with Aaron Judge and company, and adding Giancarlo Stanton to the mix may just set a record for home runs in a season. It should be fun if you’re a Yankees fan, and, of course, for you Yankee haters, there’s more to hate!

Now that sports are done, let’s go into the economy: As you know, H.R.1, The Tax Cuts and Jobs Act, recently passed, and while the full effects on everyone won’t be known for a while, I like it for businesses, and I do see a steady economy for the next year. The business climate is quite good, and confidence is high, so that always helps. 2018 should be a good year for most industries and companies. And Section 179 will be there all year, sitting pretty at $1,000,000, thanks to a nice bump from the above-mentioned bill.

I’m not sure what to make of the Bitcoin phenomena, and I can’t pretend to even fully understand it, but it and other Cryptocurrencies deserve watching. This is on my “need to know” list for 2018. Put it on yours too.

Last year, I thought Virtual Reality would make big strides, and gaming companies like Microsoft and Sony proved that prediction accurate by embracing that technology in a big way. I also thought 3D printing would be more mainstream, but it hasn’t quite caught on as much yet. But it will – it’s inevitable.     

So there you have it – some predictions for 2018. I hope you had a great New Year, and are ready to hit the ground running!

H.R.1, aka the Tax Cuts and Jobs Act, passed, and it means some sweeping changes for businesses.

Now I’m not going to comment on the other aspects of the bill, like Health Care, bracket changes for individuals, how much it means to a family of four, and similar. You can find strong opinions on that everywhere online, with the requisite arguing back and forth in the comments.

What I will comment on are two fairly important aspects that will help businesses, plus one of my favorite pieces of the tax code got a nice lift (take a guess what I’m talking about…).

First up is the Corporate Tax Rate, which was cut an astonishing 14%, representing the largest one time cut in history. The new corporate tax rate is 21%, and it’s going to make a big difference to a lot of companies, especially larger companies who employ hundreds and thousands of people. I know it’s popular to rail against corporations, but you won’t find me doing that – they are massive employers, they buy and sell countless goods and services, and if they suffer, the economy as a whole will suffer.

Second is the nod to small and medium businesses. The bill allows owners of “pass-through” companies (which comprises roughly 95% of American businesses – S corporations, LLCs, partnerships and sole proprietorships) to deduct 20% of their pass-through income. This begins to phase out at $315,000 for married couples and $157,500 for individuals. There are also some provisions limiting service based businesses like investment and law firms.

A little commentary, if I may. Again, it’s popular to bash the above as lining the pockets of the wealthy. But if working with small and medium sized businesses has taught me one thing, it’s this: if you allow a typical business owner to keep more of the money the business earned, invariably it will be reinvested in the business. Some do this by buying equipment (and I see a ton of that), others will update their website or their store, still others will move to a better location, and maybe some others will take on a talented employee they could not previously afford.

Contrary to the hype, what business owners by and large do not do is hoard money. They spend it instead.

Oh, and my favorite part of the tax code, Section 179, gets a nice boost, going from $500,000 to a cool $1 million! And the “total equipment purchased” cap is increased from $2 Million to $2.5 Million. Sweet!

Whether the tax bill is good for everyone over the long term is open to debate, but the positive implications for business are undeniable.