Tag: Finance

Should You Obtain Financing to Purchase Equipment or Lease It?

Universal Finance Corp. offers financing that keeps businesses on track to meet deadlines and avoid interruptions in the projects they are working on. We help clients in a wide range of industries that include franchises, vocational businesses, and dental equipment suppliers by providing a range of equipment financing options. Our creative financing programs and customizable payment plans provide borrowers with the funds they need to purchase equipment and obtain working capital.

When a customer comes to us to obtain financing, one question they often ask is whether it’s better to obtain financing to purchase the equipment they need or to lease it. Choosing between financing or leasing depends on each customer’s unique needs but the team at Universal can offer advice to business owners when it comes to making this decision.

According to the Equipment Leasing and Finance Association, business owners should first consider the purpose of the equipment they need and how long they expect to keep it. For short term equipment needs, leasing is often the less expensive and more sensible option. Universal suggests that our clients take the time to determine how long it will take for the equipment to pay for itself. If a business doesn’t recoup the purchasing price by the time it’s finished using the equipment, a lease is likely the best way to go. For equipment that is expected to be used for fewer than 36 months, we recommend leasing as the preferable option.

Otherwise, financing the purchase of the equipment is the better route to go as the accumulated cost of leasing may outweigh the price of obtaining financing to buy it outright. In addition, if the equipment is expected to be part of everyday operations for many years, it is usually worth owning. We also recommend obtaining financing to purchase equipment when replacing older equipment that’s been an integral part of an operation, or if new equipment is needed because current inventory isn’t sufficient to meet consumer demands.

There are many factors to consider when purchasing or leasing equipment. The team at Universal Finance will work directly with you to provide the guidance you need to choose the right options to get the equipment you need to keep your business moving forward.
Click here to learn more about equipment financing or call us at 781-219-0511 to speak with a representative today!

How to Make the Most of Section 179 Tax Deductions

When managing the overall financial health of your business, it’s important to be well-informed about the latest tax deductions that are available to you. This is particularly true during a year that is as unpredictable as 2020, because when a business is seeking to maximize its bottom line, deductions for things such as equipment, machinery, and supplies can really add up.

The team at Universal Finance can help business owners improve their company’s tax position by using Section 179 to expense the full cost of certain assets during the year the assets went into service. Instead of depreciating costs over several years, an asset’s entire cost can be deducted in the year that it was available for use. These steps will reduce your company’s taxable income and create tax savings.

RULES FOR SECTION 179 DEDUCTIONS:

Eligible equipment must be new to your business – even used equipment that is new to your company qualifies

Section 179 applies to tangible personal property and qualified real property – check with your tax professional to determine if your purchases qualify.

The deduction limit is $1,040,000 for tax year 2020 and is reduced by the amount by which the cost exceeds $2,590,000.

All assets must be placed in service by December 31 of the tax year.

Once a business has reached its Section 179 limit, bonus depreciation kicks in and a 100-percent depreciation deduction can be done in the first year for property that includes machinery, equipment, and computers that were placed in service after Sept. 27, 2017, and before Jan. 1, 2023. Businesses may also be eligible for the Section 179 deduction, the bonus depreciation deduction or a combination of both.

We hope this information has been helpful as you navigate the best way to leverage all the deductions that available to your business within the parameters of Section 179. If you still have questions, contact Universal Finance and we will work with you to give you all the guidance you need to take advantage of the benefits that Section 179 affords your business.

The Pros and Cons of Buying New vs Used Equipment

To address the equipment needs of our clients in a wide range of industries that include construction, transportation, restaurants, and medical equipment suppliers, Universal Finance offers financing that keeps businesses on track to meet deadlines and avoid interruptions in the projects they are working on. Our creative financing programs and customizable payment plans provide borrowers with the funds they need to purchase equipment and obtain working capital.

When a customer comes to us to obtain financing, one question that often comes up is whether it is better to buy equipment that is new or used. Because every customer’s needs are unique, there is no right answer, but there are some general guidelines in most industries when it comes to buying equipment. Making the choice between new or used depends on the unique position of the business and what the short and long-term equipment inventory needs are.

One of the biggest pros of buying used equipment is the lower upfront cost. It’s usually the main reason a business chooses used. However, other pros include retention of value and lower insurance costs. One of the cons of buying used equipment could be the fact that the equipment might be in bad condition and will require ongoing maintenance. We always encourage our customers to really try out and inspect the equipment before buying so they don’t encounter this problem down the road.

Similarly, there are also upsides and downsides when it comes to buying new equipment. Among the pros of buying new include trouble-free operation, a warranty, up-to-date technology, and tax advantages. These advantages come with a big price tag, though, which is the biggest con for buying new equipment. Newer equipment also has a rapid depreciation of value compared to used equipment.

The bottom line is – there are many factors to consider when deciding whether to purchase new or used equipment. Each purchasing route has pros and cons, and these factors can be applied to the construction industry as well as the other industries that Universal Finance serves. The team at Universal Finance will work directly with you to provide the guidance you need to choose the right equipment for your business and to secure the financing you need to acquire it.

Click here to learn more about equipment financing or call us at 781-219-0511 to speak with a representative today!