As roadside service providers, the amount of calls you answer depends on the number of tow trucks you have on the road. As labor and insurance costs continue to rise, finding ways to expand your business while conserving cash is crucial. Financing a tow truck in 2021 could create a significant opportunity for towing providers to save on their 2021 income tax return - while also adding essential trucks to their fleet.
If your business has been waiting to save up for a new truck, here’s how Section 179 can help you expand without breaking the bank. When you finance a tow truck this year, you can claim a 2021 Section 179 income tax deduction. This tax benefit allows businesses to deduct up to 100% of qualifying equipment purchased during 2021. That means the truck you finance this year can save you thousands on your 2021 income tax return.
If saving thousands of dollars could make a meaningful impact on your business, now is the time to start planning on how to take advantage of Section 179. To qualify, equipment must be purchased and in operation by December 31, 2021. By financing the truck, your business can still enjoy the benefits of a larger tax deduction without investing tons of upfront cash.
If you’d like to talk to someone about Section 179, schedule a meeting at: www.beaconfunding.com/businessgoals.
If you’re ready to add a truck with the help of equipment financing, apply online today and hear back within 24 hours at: www.beaconfunding.com/apply.
How Do Equipment Financing & Section 179 Benefit Your Towing Business?
Equipment financing helps break down the cost of tow truck purchases into manageable monthly payments. Instead of paying the entire purchase price upfront, you’re paying for the equipment over time. That makes it faster to get the truck you need at a price you can afford.
Businesses don’t need to make it to the end of their financing term before benefiting from Section 179 tax savings. Even though you are only partially through your repayable, Section 179 allows your business to deduct the full purchase price of eligible equipment year one.
More Benefits of Equipment Financing
- Conserve Cash - Finance the new or used equipment you need for a low monthly payment.
- Earn As You Finance - Put the equipment to use earning revenue for your business.
- Claim Your Tax Savings - Write off the FULL purchase price of the equipment on your 2021 income tax return.
Want to see how much you could save?
Download Beacon Funding’s Mobile App to see just that! Simply put in the cost of your equipment in the “Tax Savings Estimate” and get your results. You’ll be surprised by how much you can save!
To try the Equipment Financing Calculator, click here if you're an Android user or click here if you're an iPhone user.
Example of How Section 179 Works
When your business acquires equipment, tax deductions are realized over its useful life. Section 179 can help your business benefit sooner.
For example, let's say you buy a truck with a useful life of 5 years for $50,000.
Without Section 179: You would write off a portion of the purchase price annually, spreading your tax benefit in smaller increments over five years. In this example, that would mean a $10,000 deduction each year for five years.
While deducting a little at a time can be beneficial, many businesses would prefer to receive their total tax benefit upfront. Unlike other depreciation methods, Section 179 helps to accelerate tax deductions, allowing your business to benefit immediately.
With Section 179: You are able to deduct the entire purchase price of the equipment in the tax year you purchase it. This significantly reduces the total cost of equipment to you. In this example, that would result in a $50,000 deduction year one.
Let’s say you chose to finance that same $50,000 truck for 60 months and have already made six payments before filing your return. At that time, your business has only paid 10% of the total cost of the truck. But, with Section 179, you still get to claim 100% of the purchase price as your deduction. Sounds pretty good, doesn’t it?
Section 179 FAQ
Will my towing business qualify for Section 179?
Businesses that purchase eligible new or used equipment during the tax year may qualify for a Section 179 tax deduction. Every year, the U.S. government sets the deduction limit and spending cap for equipment. This is important to know if you’re looking to acquire a lot of equipment in the same year. Once this limit has been reached, the deduction decreases on a dollar-for-dollar basis.
You can also take advantage of bonus depreciation for certain types of equipment above the Section 179 threshold, which helps reduce your tax burden further.
What are the Section 179 deduction limits for 2021?
- Section 179 Depreciation for 2021 is limited to $1,050,000 (adjusted for inflation each year). If you purchased equipment over this amount, you might qualify for “Bonus Depreciation”.
- Bonus Depreciation details are complex, so please consult your tax advisor!
- Equipment must be put into service by December 31, 2021, to qualify.
- Combining the use of equipment financing and Section 179 tax benefits is a powerful “cash in your pocket” tool.
Does used equipment qualify for the deduction?
New and used equipment acquired for business purposes may qualify for a deduction. Everything from heavy-duty equipment, business vehicles, office furniture, computers, and off-the-shelf software may be eligible.
As with any tax-related questions, consult your CPA before purchasing to determine if the equipment you want qualifies for the Section 179 tax deduction.
What is the deadline to qualify for a 2021 Section 179 deduction?
Make sure your equipment is in operation by December 31st, 2021. If the equipment you are looking at takes a few months to deliver, plan ahead to make sure it is available before the deadline.
Start Benefitting Your Business Today with a 2021 Section 179 Tax Write-Off
When you combine simple, easy, and competitive equipment financing with Section 179 tax benefits, it is easier to fit new or used equipment into your budget. A trusted equipment financing provider like Beacon Funding can help you acquire your tow truck with financing so you can invest in your business today.
Remember to start the process sooner than later, especially before the year-end rush. Don’t risk the equipment you want not being available or delivered on time.
To Get Started
- Take the first step toward financing your tow truck.
- Make sure it’s in operation and used for business purposes before December 31st, 2021. If the equipment you are looking at takes a few months to deliver, plan ahead to make sure it is available before the deadline.
- To claim a Section 179 write-off for Depreciation and Amortization, fill out form 4562 with your 2021 income tax return.
Remember, you want to consult your professional tax advisor. The sooner you do, the more likely you can use the opportunity to keep cash in your business.