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Section 179 of the IRS tax code allows businesses to deduct the full purchase price of qualifiying equipment and/or software purchased or financed during the tax year. That means that if you buy (or lease) a piece of qualifying equipment, you can deduct the FULL PURCHASE PRICE from your gross income.
This deduction is good on new and used equipment, as well as off-the-shelf software. To take the deduction for tax year 2022, the equipment must be financed or purchased and put into service between January 1, 2022 and the end of the day on December 31, 2022.
This is the maximum amount that can be spent on equipment before the Section 179 Deduction available to your company begins to be reduced on a dollar for dollar basis. This spending cap makes Section 179 a true "small business tax incentive" (because larger businesses that spend more than $3,780,000 on equipment won't get the deduction.)
Bonus Depreciation is genrally taken after the Section 179 Spending Cap is reached. The Bonus Depreciation is available for both new and used equipment.
Financing enables a customer to make payments over time rather than investing a lump sum of cash upfront. Monthly payments can be tailored to fit budget levels or revenue streams and may be tax deductible.
Maintaining credit lines provides a safety net for business operation and fuel for growth. Financing provides customers with a new source of credit, allowing them to keep existing bank lines intact for other needs.
Financing reduces upfront costs, allowing you to obtain the assets you need now without affecting cash flow. It preserves working capital and existing credit lines and frees up cash for other operational expenses.
Financing provides flexibility that purchasing does not offer, such as: 100% financing with no money down, payment structures that match cash flows or business cycles, and a variety of end of term finance options.
You may be able to deduct all or a portion of your equipment cost in the year it is purchased, depending on the amount. Any amount over the first year deduction "cap" may also be depreciated over the next several years, giving them an ongoing tax deduction (Consult your accountant for actual tax savings for financing your purchase).
Finance companies understand there may be other costs involved in an equipment acquisition in addition to the equipment itself, such as installation and freight. As a convenience, you can bundle those other costs into the finance contract and this allows you to finance all of the costs associated with your new equipment purchase in one affordable monthly payment (certain restriction apply). The best reason of all to finance...it's quick and easy!