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Paying cash is a mindset

Discussion in 'Business Operations' started by muddywater, Sep 3, 2012.

  1. PerfectEarth

    PerfectEarth LawnSite Bronze Member
    Posts: 1,735

    In an ideal world today, paying cash for every large business purchase would be great. But if you have a growing business and need the tools to expand and service customers, financing is fine in my opinion. I've fought the idea and dreamed about being totally debt free, but it can actually be wise to finance smart. Why? TAXES.

    You can build good credit, take advantage of low rates, expense the total purchase at strategic seasonal times to save greatly on quarterly estimated payments to Uncle Sam, and deduct any interest expense on your loan. This makes sense to me. Helps with cash flow, give you the tools you need, and builds relationships with lenders... you never know when you may need that certain something and cash is unavailable.
     
  2. muddywater

    muddywater LawnSite Bronze Member
    Posts: 1,813

    Cash purchases are deductible. Alot of landscape companies i know, finance the asset in december take the complete writeoff and basically pay on the tax deduction for the next 5 years.

    You would be amazed at how much cash flow you can have if you have everything paid off.

    If you are profitable and make money, why is there nothing in the bank?
     
  3. Duekster

    Duekster LawnSite Fanatic
    from DFW, TX
    Posts: 7,961

    so you pay cash and take the straight line write off too?
     
  4. muddywater

    muddywater LawnSite Bronze Member
    Posts: 1,813

    Depends on my accountants recomendation. Sometimes depreciate it, sometimes write off completely. My accountant is a multi-millionaire and business advisor to me. I let him play with the numbers.
     
  5. Duekster

    Duekster LawnSite Fanatic
    from DFW, TX
    Posts: 7,961

    really... it is your money
     
  6. This reminds me of a reformed drunk who thinks he is superior now.
     
  7. muddywater

    muddywater LawnSite Bronze Member
    Posts: 1,813

    Uh yeah. I maintain a couple of his million dollar apart complexes that are paid for. It is rare to get intimate knowledge and advise from someone that has made it. Well worth the $250 an hour.
     
  8. muddywater

    muddywater LawnSite Bronze Member
    Posts: 1,813

    No my sh!t still stinks, in fact i took a dump in a 5 gallon bucket today bc i couldnt make to a bano!

    I used to wake up in a cold sweat some mornings because of debt. My main motivator has been fear. I have seen so many companies fail, i just decided to be bullet proof. And i got even more scared after i started a family, bc they depend on my success.
     
  9. cgaengineer

    cgaengineer LawnSite Fanatic
    Posts: 15,782

    Not true at all.
    Posted via Mobile Device
     
  10. PerfectEarth

    PerfectEarth LawnSite Bronze Member
    Posts: 1,735

    It is possible to have "good" debt on the books (in fact, it's wise to have some) and plenty of cash on hand. Could I go buy a new truck with cash right now? Sure! (well, maybe slightly used, lol) ...but I can't. Being over-extended is a whole other thing. Balance.
     

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