Now is the Time to Buy New Equipment

If you are a business owner and you are considering purchasing new business equipment, now is the time to act! With the passing of the Economic Stimulus Act by Congress, business owners have been granted a tax break for purchasing new equipment in 2008.
Most of us have heard of the bonus tax refunds that have been approved through the passing of the Economic Stimulus Act. However, these are just a portion of the act. You may not know that there are components of the act that benefit business owners. One portion of this deals with the purchasing of new business equipment. Let’s face it, as a business owner of any kind, there is almost a continual need for new or improved equipment to help our business perform better. Unfortunately, many times we put off these purchases for financial reasons. Now you can purchase the new equipment and receive a tax break for doing it. The Economic Stimulus Act states that any business owner who purchases and puts into use new equipment in 2008, will receive a bonus 50% depreciation on that equipment on their 2008 taxes! This could mean significant tax savings for your business! The government has implemented this program to try to entice business owners into making their equipment purchases now in order to help stimulate the economy. The tax savings are available for any business equipment purchase that will be depreciated on your 2008 taxes. It is applicable to any type of business as well.
What types of equipment qualify? Any type that is used directly for your business, to benefit your business, and that will be depreciable on your 2008 taxes. If you are unsure if certain equipment will qualify, consult your tax professional for advice. Let’s look at a couple of examples of business types and the type of equipment that may apply. We’ll start small, with a home daycare provider. Child care providers need equipment unique to their business, such as play equipment, appliances, and computer equipment. As a child care provider, if you purchase equipment that will be in use long term, then you will probably depreciate that equipment on your taxes. So, if you purchase a new swing set, a new refrigerator, or a new computer, you can collect the additional 50% tax savings when you depreciate these items. While these are a large outlay of cash now, it is worth it to make the purchase now to receive the tax benefits. Looking at a computer consulting company, they may need to purchase a new server, new office furniture, or new laptops for the consultants. Again, these purchases will be depreciated on the 2008 taxes, so they will qualify for the additional tax credit. Finally, let’s look at a physician’s office. Physicians often need to purchase the latest technology to offer their patients the best care possible. Many times this equipment is very expensive. By purchasing this equipment in 2008, at least they will qualify for the additional 50% depreciation on the equipment.
Since this tax benefit is only available for equipment purchases made and put into use in the year 2008, now is the time to buy. It may be hard to part with that money up front, but if you know you are going to need the equipment eventually anyway, it is worth it to make the purchase this year and benefit from the tax savings.