Tax Advantages For Businesses With Fixed Assets

January 4, 2018 by CNH Finance, LP in category “Financing”

We frequently explore the benefits of fixed assets and how they can help businesses get financing without needing traditional bank loans. However, there are tax advantages to owning fixed assets as well. With a new year upon us, and many businesses putting paperwork together for filing taxes, we are going to explore the tax advantages of fixed assets.

A Quick Overview Of Fixed Assets

In short, fixed assets are those items which are actually owned by a business. As defined by the IRS, fixed assets are equipment, inventory, vehicles, facilities, office space, receivables, and similar items. Most large fixed assets have an intrinsic value which can be leveraged for asset based lending, which is a debt-free revolving line of credit. Fixed assets may also extend to office furniture, software licenses, computers, servers, and more, according to Section 179 of the IRS Tax Code.

Tax Advantages For Business Owners

Fixed assets can be claimed as itemized deductions for business owners. Section 179 of the IRS Tax Code states that any purchased assets can be deducted, provided there is paperwork to show proof of purchase. For instance, if a business purchases a piece of equipment before the end of 2017, the initial price paid can be completely deducted when filing taxes. The following year, the business can claim half of the purchase price as a Section 179 deduction. After the second year, equipment follows a depreciation formula according to its expected life cycle. The tax advantages offered for fixed assets can mean big savings for businesses on a yearly basis.

Increasing You Financial Standing

By regularly trading out older fixed assets for new one, the overall value of your business increases. Your business will be able to maintain a competitive edge and receive Section 179 tax advantages without letting equipment age out of the depreciation schedule. Additionally, better equipment translates to increased financing through asset based lending, which gives businesses higher purchasing power and access to working capital without relying on traditional bank loans.

Learn More About The Benefits Of Equipment

At CNH Finance, our specialty is asset based lending. We will provide a revolving line of credit based on the value of your equipment and other fixed assets. With fixed assets, your business will get access to the financing necessary for growth, while simultaneously getting the tax advantages offered by the IRS for your equipment and other assets. Contact our offices today to learn more.

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