Business Tax Write offs
One of the best Business tax write offs that a business can have when acquiring assets or obtaining funding is to finance through a lease.
In most cases, when leasing, the full payment can be written off, with an example below.
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Biggest Deductions
These are beyond the normal payroll, lease and other deductions. Don’t forget
to deduct these as appropriate per IRS rules.
Commercial Real Estate Mortgages
Mileage
Accounting Fees
Legal Costs
Some personal legal costs may spill over and be deductible by the business.
Technology purchases
Does your business use the same technology you may have bought for yourself? Maybe
your business has been using that same technology, including software, monthly memberships,
etc.
A customer has secured a $52,000 lease, either for the acquisition of an asset, or through a real estate leaseback.
The following cost of financing is with regard to funding for $52,000, for review.
A lease may be written of 100% and can return approximately $10,234 in Tax savings to you, as follows:
60 payments, $1,319.09 per month plus tax = $79,145
Tax Write Off: $79,145 to be written off $100%
$79,145 X .28 (National Average)
= $22,160 in Tax Savings
60 Monthly payments of $1,319.09 per months for $79,145
– $22,160 (You recover Tax Savings) – $52,000 (You recover in funding) = $4,985 (Total cost not recovered)
Per Year
$4,985 % 5 Years = $997 Per year total cost not recovered
APR – Annual Percentage Rate
$997 / $52,000 = 1.9% Effective APR per year
Cost per month
$997 / 12 = $83/Mo
In business, dollars invested wisely can multiply themselves many times over, and the $83 per month becomes almost insignificant in light of the potential the investment can provide based on even a modest profit margin in the use of funds.
As a result, employing leasing, either via the equipment leaseback or real estate leaseback method, or to obtain capital, is a cost effective approach for businesses to employ.
