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Tuesday, January 16, 2018

New Tax Law Should Have Positive Impact on Capital Equipment Market

Recently we had the most radical tax plan change since 1986 . There has been a lot of media Coverage focusing on the potential impact on our national debt and how it favors the wealthy at the expense of the middle class and poor. One thing can;t be debated, however, is it it will free Up capital to potential re-invest for the small business owner . Here are the key changes that will impact individual taxpayers / business owners Lower individual income tax brackets across the board : Many businesses in the pallet industry are taxed as sole proprietorships , partnerships, or S Corporations . This means business is passed through to the owners , who pay taxes based upon individual income tax rates. Starting in 2018 , HR 1 lowers individual income taxes Across the board. Graduated rates that apply to ordinary income are 10%, 12% ( down from 15% ), 22% ( down from 25%) , 24% ( down from 28%) 32% ( down from 33% ) 35 and 37% ( down from 39,6) . HR 1 leaves the maximum tax rates on net capital gains and qualified dividends the same as before. Significant reduction in Corporate tax rate Permanently lowers the maximum corporate tax rate from 35 to 21% beginning in 2018. Transformation of corporate tax rate from graduated system to flat rate for all income levels , Lowers tax rates for pass-through business income- 2018 to 20125 individuals receiving Income from a a pass through business - including sole proprietorship , S Corp or partnership- take a new Section 199A Deduction These owners can generally deduct 20% of qualified business income defined as net amount of Income , gain, deduction and loss attributable to a domestic trade or business , from their taxable income . 1099A deduction is generally limited to 50% of w-2 wages paid . Wage limitation applie s only to individuals with taxable income greater than $ 315,000 or $ 157500 for individuals . Section 179 - Beginning in 2018 an increase in Section 179 - same year write up goes to $ 1 million ( $ 500k more than before ) with a $ 2.5 million threshold raised from 2.03 million . Bonus Depreciation - HR allows 100% bonus depreciation ( up from 50% ) for five years for qualifying personal property acquired or placed into service after September 27th, 2017. Additional 5 year depreciation is then reduced until fully eliminated in 2017 . Significantly HR applies bonus depreciation to used property , not just new property

Tuesday, December 26, 2017

Pre-pay taxes While You can to minimize tax bill in 2017 ..

Now that the new tax law has been signed by President Trump, there are steps you may consider taking right now before year end. For example, personal property taxes may make sense to pre-pay in 2017 with standard deduction doubling for next year. According to San Jose Mercury News - Here’s the short form: You can’t pre-pay your 2018 state income or property taxes. But you can pay the last installments of your 2017 taxes — which are not due until next year — before 2018. If you itemize, doing so could save you big money on your federal tax bill this year. Starting next year, the tax overhaul that President Donald Trump signed into law Friday caps the deductions for state and local income and property taxes at $10,000 combined.

Monday, November 13, 2017

Section 179 - Invest in 2017 at higher corporate rate ?

Now that Congress is debating lowering the corporate tax rate , it might be even more important to acquire equipment / technology you have been debating . Since Section 179 is based on a 100% writeoff in year 1, but investing now at 35 percent tax rate you may get a significantly higher discount than if you implement in 2018 .

Sunday, September 14, 2014

Improving Your Financing Chances - Companies should also check their Dun & Bradstreet (D&B) report. D&B compiles credit data on businesses from public records, vendor payment information and financial reports and uses it to produce reports that evaluate a company’s creditworthiness. It is essentially a company’s credit score. If your personal credit does not look very good, take steps to improve it before applying for a business loan. You can do this by paying bills on time, paying off credit card balances every month, getting rid of outstanding debt and not applying for more credit too often. This will take time, so if you know you may need financing in the future start preparing now.

Tuesday, December 6, 2011

Equipping Small Businesses for Success

Equipping Small Businesses for Success

William G. Sutton, CAE
President and CEO, Equipment Leasing and Finance Association

Most small businesses require equipment in order to operate, from computers to furniture to fleet cars, but simply don’t have many funding options. Aside from internally generated cash flow or credit lines, businesses interested in acquiring equipment require other choices for financing their capital spending.

Many finance companies, from commercial banks to manufacturers and smaller, more specialized commercial finance companies around the country, offer a variety of options for small businesses who want to acquire equipment.

Knowing the financing options available for equipment acquisition will enable you to get the most for your business without hamstringing your budget or your company’s future. Remember, you make money by using equipment, not necessarily by owning it.

Benefits of Equipment Financing In Uncertain Conditions

The current market situation finds equipment financing as vital and available as ever, enabling businesses to secure the assets they need. The Equipment Leasing and Finance Association’s (ELFA) Monthly Leasing and Finance Index, which reports economic activity for the $521 billion equipment finance sector, showed new business volume for August 2011, the latest data available, was up 33 percent over the same period in 2010.

Despite some gains businesses are experiencing, economic recovery is slow. For businesses short on cash, equipment financing offers the following benefits:

• enables expense planning

• maintains cash flow

• preserves capital

• requires no down payment

• can provide 100 percent financing.

The flexibility of equipment financing, especially leases, is another key benefit that can enable customized solutions for a business’s accounting, tax or cash flow needs. Leases are available that allow for seasonal business fluctuations, lower monthly payments while a project is ramping up and the equipment is not yet generating revenue, and other specific circumstances a business may experience.

Availability of Credit

Access to credit is one of the many benefits equipment financing provides in a restricted credit environment. According to a study released in August 2011 by the National Small Business Association, 73 percent of small business owners report that their business had been impacted by the credit crunch. Among small business owners for whom capital availability has been a problem, 36 percent say that they have been unable to grow or expand the business.

However, credit approvals in the equipment finance industry are historically higher than those for bank loans, and have been improving steadily, according to data from the ELFA. The role of the equipment finance industry in providing credit to businesses has wider economic impact, since in a typical recovery most job growth is generated by small firms.

Advantages for All Business Cycles

In addition to market-sensitive considerations that make equipment financing attractive to businesses, its operational advantages provide benefits in all economic cycles:

Access to Equipment Expertise

Many equipment finance companies have special relationships with manufacturers and distributors. This expertise also enables the best possible lease payment terms since their knowledge and experience with various equipment types allow equipment finance companies to accurately set the residual rate—the value of the leased equipment at the end of the lease term—for your equipment type.

Equipment Obsolescence Management

Funding equipment such as IT, communications and medical/healthcare equipment through leasing, loans or other financing arrangements helps manage equipment obsolescence by enabling updates. Certain leasing finance programs can allow for technology upgrades or replacements, so the risk of being caught with obsolete equipment is lower with leasing than with other equipment acquisition methods.

No-Hassle Equipment Disposal

Financing also allows upgrading without having to manage equipment disposal and other ownership burdens. Particularly with computers and other technology devices, disposal can be a complicated issue, governed by federal, state or local regulations, which equipment finance companies are well positioned to handle.

Better Risk Management for Risky Times

The risk of equipment ownership is a consideration for businesses regardless of business cycles. Investing in large capital expenditures represents a big financial risk, especially to small companies. Even with low interest rates that make purchasing attractive, the potential consequences of ownership can erode the upfront benefits. Risks incurred from managing assets, such as inconvenience, inexperience, obsolescence and loss of profitability, can be dramatically reduced through the transfer of equipment ownership to the equipment financing company. Financing removes many unnecessary risks, allowing businesses to focus on their core competencies.

Outsourcing Equipment Management

Businesses have cut back staff significantly over the last few years, and most businesses lack the resources or knowledge to efficiently manage and sell their old equipment and purchase new. The convenience of having equipment managed by a third party, such as an equipment financing company, essentially outsources the equipment management function.

Valued Equipment Consulting

Most importantly, the equipment financier can be considered a valued consultant, providing additional benefits through lifecycle asset management solutions. Financing companies can provide dependable asset management, which helps businesses track the status of equipment, schedule upgrades, and receive full equipment lifecycle services from installation to disposal.

Equipping Business for Success

Equipment leasing and financing plays a significant role in helping all types and sizes of commercial businesses in the United States to acquire the equipment they need with increased flexibility, regardless of business conditions. The role of the equipment finance industry in funding the capital expenditures businesses need to operate and grow contributes not only to businesses’ success, but to U.S. economic growth.

Businesses who want to learn more about how they can incorporate equipment financing into their business strategies may visit This informational website has a wide range of resources, including a review of the various types of financing, a glossary of terms, a lease vs. loan comparison and questions to ask when financing equipment.

©Equipment Leasing and Finance Association 2011. Reprinted with permission.

William G. Sutton, CAE, is President and CEO of the Equipment Leasing and Finance Association, the trade association that represents companies in the $521 billion equipment finance sector, which includes financial services companies and manufacturers engaged in financing capital goods. This year the ELFA is celebrating 50 years of equipping business for success. For more information, please visit