10-24-2012, 11:33 AM
LawnSite Gold Member
Join Date: Feb 2011
Location: Long Island, NY
Originally Posted by CL&T
That was another point I was going to bring up but I figured it would be better if I didn't because it would open another can of worms with some of the financial geniuses here.
You can give it to the government or you can spend it on equipment and it works whether you pay cash or finance. It's either a 179 deduction the year you acquire it or you depreciate it over a number of years. But from what I see I doubt some here even have competant accountants or pay taxes on the cash they pocket.
I reposted this because I could not edit it.
For a person that does not like worms you keep opening cans by the truck load.
You cite examples and make them appear to be appropriate for universal application across the board in every instance.
Many people in this business when starting out do not make a gross income and or clear enough profit to make it worth while to hire a first class accountant. What that accountant would save them against what they would have to pay that accountant would cancel out the savings.
Though hopefully they reach that level quickly where they will need an accountant.
Now to your 179. Any other loop holes an accountant can find.
I know of a restaurant owner in Westchester County, NY. Highest overall real estate values of the counties surrounding NYC.
He and his two partners were owned nice 3 br colonials on 1/2 acres. These three men were told buy their accountant to buy new more expensive homes. They said no.
The accountant said well buy a home or pay more to the government. So they bought 4/5 br colonials, on 1 acres. They deer hunted. So the new houses had walk in fridges to hang their deer.
These guys were making money hand over fist.
For them to buy these new homes was not putting their business at risk.
For a LCO to get a loan based on getting a new customer, to buy a $10,000 mower to get this new customer. Then lose that customer will bankrupt that business.
A business that needs to buy a $10,000 for a new customer and can still afford to pay that loan if they lose that new customer is a whole different story.
Then to say better to buy a new expensive piece of equipment then pay taxes. That needs to be qualified as well. The size of a businesses cash reserve needs must be factored in.
Then do you really need to buy that new piece of equipment that will get you a tax break.
Some times not. One is in business to amass wealth and retire. Instead of holding onto cash, buying equipment for a tax break you get a $10,000 piece of equipment that will be worth nothing in time.
Or invest that $10,000 cash for a retirement fund to earn income for one's retirement.
Getting loans or as some like to say using credit as a business tool to be used all the time, is the same as saying that everyone should always use only a certain sized mower all the time.
Loans should only be used when they will not put the business at risk, and it is to your advantage to do so.
Our founding fathers were onto something when they said in god we trust, all others pay in cash.