Shop Product Types
Why Consider Financing?
Financing equipment allows businesses to get needed equipment now, without affecting bank or credit lines.
Your business needs the proper equipment to stay competitive, to be more efficient and to increase profit. But with all the day to day operating expenses and cash flow cycles, some equipment purchases are just more difficult. That's where financing options may help.
Some of the benefits of leasing:
- Conserve working capital
- Simple application /approval process
- Finance installation and training costs in one lease
- Potential tax savings under IRS Section 179
- $1 purchase option to own the equipment at lease end
- Quick turnaround times on Credit Applications -
Approvals in as little as 2-4 hours
- Fixed monthly payments throughout term
- Trade up to new equipment
- Competitive lease rates
DID YOU KNOW?
Leasing May Help Your Business
Manage Federal Taxes
You pay your fair share of taxes. But, if you don't want to pay more than necessary, you should plan ahead on to take advantage of available deductions.
Every business has operating expenses, but these expenses fall into different categories when you file your annual tax forms to the IRS.
The purchase of tools and most shop equipment can be used as a tax deduction if it meets certain criteria.
• The property must last more than a year.
• The property must be used primarily for business (51% or more).
• The property must be purchased between January 1 and December 31, 2015.
• The property must be put into service during 2015.
TAX DEDUCTIONS for EQUIPMENT COSTS
Depreciation vs. Section 179 Expensing
When a business purchases qualifying equipment, a depreciation method is typically used. Depreciation writes off a portion of the cost each year beginning with the year it is placed in service. There are several factors involved with determining how much can be deducted each year. (* See Example Below)
However, Section 179 of the IRS tax code allows businesses to deduct the full purchase of qualifying equipment and/or software purchased or financed during the tax year. Meaning, the full purchase price will be deducted from your gross income. In the midst of thousands of pages of tax law and potential deductions, the Section 179 Deduction is a relatively simple, "fits all" rule to manage your tax obligation.
Businesses can lease equipment
and still take advantage of the
Section 179 Deduction.
With the Section 179 deduction, you can write off 100% - up to $25,000 - of the price of your qualifying equipment.
But, you don't have to SPEND 100%. With a properly structured lease, your tax deduction can actually be more than your first year of payments.
SECTION 179 RULES
How Much and When?
The Section 179 Deduction can change each year. Currently for 2015, the limit on the total amount of business property expenses that you can deduct each year under Section 179 is $25,000. It is very important to know what the current year's limits are. (For example, in an effort to stimulate a faltering economy, this limit was as high as $500,000 in 2010 though 2013.)
A few other points:
• $1 to $25,000 - You don't have to claim the full amount.
It's up to you to decide how much to deduct under Section 179.
Whatever amount you don't claim under Section 179 must be
• There is a limit on the total amount of purchases that
Section 179 can be applied to. Everything else must be
depreciated for deductions.
The applicable limit for total purchases in 2015 is $200,000
• If your purchases are less than $200,000, you may elect to deduct under Section 179 the first $25,000 and depreciate the remainder.
• You must reduce your Section 179 deduction by one dollar for every dollar your annual purchases exceed $200,000. That means that if your business spends $225,000, your Section 179 Deduction is $0 and only the depreciation method for tax deduction is used.
• You can't use Section 179 to deduct more in one year than your net taxable business income for the year. Any amount you cannot deduct in the current year, you can carry forward and deduct the next year - or any other year in the future!
AN EXAMPLE OF DEPRECIATION AMOUNTS
• Sam spends $4,000 on shop tools which arrive and he begins using on October 1, 2014.
Using the MACRS depreciation with Mid-Quarter Convention and Straight Line Depreciation rules, Sam would have to deduct a portion of the cost each year over 7 years.
• Since this was placed in service for the last quarter of 2014, the depreciation would look something like:
TOTAL TAX DEDUCTION
2014 = $71
2015 = $571
2016 = $571
2017 = $571
2018 = $571
2019 = $571
2020 = $571
2021 = $500
Ask your Tax Advisor for complete information on limits, implementation and advise on how deductions can benefit your business.
For more information, visit www.irs.gov.
Benefits of Leasing with LCA
ToolTopia.com has partnered with Lease Corporation of America (LCA) to offer customer friendly financing programs for our products. Lease Corporation of America offers an easy to use leasing option that includes a simple one page lease application, credit turnaround in less than four hours and personalized service for any questions you may have about financing.
• Fixed monthly payment -
Payments do not fluctuate with
interest rates like loans.
• Easy Documentation -
Fast and simple application and
• Preserved Credit Line -
Leasing does not affect your bank
or credit lines.
• Possible tax benefits -
Expense payments using
Tax Code Section 179.
All financing offers: with approved credit.
TOOLTOPIA® is not an authorized tax advisor. You must consult
your tax advisor, visit www.irs.gov
or contact the irs hotline at 800.829.4933
to confirm qualifications for the Section 179 tax benefit.