When do you recommend buying lawn care equipment for your company?
I generally recommend that you wait until the very last minute to buy new equipment. That allows you to keep the money in the bank until the last minute. There’s a number of reasons behind that. If I need a big piece of equipment, I could buy that a week before I need it or a couple of days before I need it. So many companies and so many owners get excited by a new piece of equipment so they buy it months in advance. Generally, this is not a good idea for a whole number of different reasons.
This is the beginning of December. December is a time when there might be an exception that makes sense in your business. This is the time of year when buying lawn care equipment and pre-spending money on chemicals and supplies that you’ll be needing in the first quarter of the year, makes sense. You can take a full deduction in some cases of this equipment, maybe even a truck if the gross weight of that truck is high enough and you can write it off in full on your taxes in this calendar year. This brings down your tax bill for the year, leaving more money in your pocket to spend and reinvest into your business next year.
If you have extra cash in the bank, you can spend that cash to buy the equipment now that you might need in February or March, and get the full tax deduction on your 2014 taxes. If you buy that equipment and you finance it, even though it’s financed you can fully depreciate it in this calendar year, saving you money. Basically, instead of giving the money to the IRS, you can take that same money and reinvest it your business.
This month is the one time that I say it might make sense depending on your business. You should have a conversation with your accountant, but it might make sense to spend the money in advance rather than waiting a couple more months. If you know you’re going to need the equipment, maybe you buy it now instead of in February or March.