December 7, 2023
Now, I readily admit I’m not a tax consultant, or have enough knowledge to even be a little dangerous when it comes to tax laws. You should always consult a tax professional. That being said, as the fiscal year draws to a close, businesses often find themselves in a financial position to make capital expenditures. A couple of our customers have reached out to us to discuss adding trailers to their fleet before the end of year for tax advantages. So, perhaps we should explore together some possible tax and financial benefits of purchasing a trailer (or other capital assets for that matter) before the end of the year which is the end of the fiscal year for many.
One of the primary advantages of buying a trailer (or other capital assets…machinery, auto etc.) towards the end of your fiscal year has some potential tax benefits such as tax deductions, credits, depreciation, and amortization all of which are part of your purchase benefits. If you buy before the end of your fiscal year, your business may be able to reduce tax liability.
Instead of allowing remaining funds stay unspent or face potential budget cuts going forward to the next fiscal year, investing in equipment enables many companies to optimize their financial allocation and utilization, thus optimizing the financial planning process.
EFFICIENCIES OF OPERATIONS & EXPANSIONS:
Trailers and other capex can significantly contribute to operational efficiencies. Furthermore, capex provides additional resources for transportation and other logistics thus allowing your business to enhance your capabilities and possibly expand operations. Investing in such assets can streamline processes, increase productivity, and support the company’s growth objectives.
DISCOUNTS, NEGOTATING POWERS, VALUE-ADD, OH MY:
Towards the end of your fiscal year, suppliers and vendors may be more open to negotiating to meet their sales quota or achieve year end targets. This scenario may be different than it was in pre-Covid years. However, they may still apply. As such, businesses can leverage their opportunities to secure better terms, discounts, bulk discounts, etc. towards the purchase of capex, all of which can result in cost savings, value-added, making the investment that much more important.
MODERNIZATION & COMPETITIVE ADVANTAGE:
Updating your equipment, or expanding your fleet by acquiring a trailer, can keep your business competitive in a very competitive industry, providing you with a potential advantage (volume of fleet, more reliable, etc.) All of which can provide enhanced customer satisfaction, user experience which can provide you with a unique value proposition which will help develop long-term relationships with current and future customers.
LONG TERM SAVINGS:
Investing in quality trailers, such as those built by Workforce by RBD, or other durable capital assets can lead to long term cost savings. While the initial investment might be significant and may hurt in current period, the reduced maintenance, increase efficiency, and extended lifespan could result in savings over time that could be substantial and should more than offset the immediate financial burden.
So, what to do? Analyze your current equipment in terms of performance, age, and conditions, review long term growth strategies, consult your financial team (including tax partners), and determine the feasibility of adding to your fleet, or replacing equipment with new equipment, so your company is aligned with your long-term growth strategy. Careful consideration and due diligence must be exercised. If you’ve done everything except purchase the trailers, take a look at the Workforce By RBD line at www.workforcerv.com
Good luck, from your friends at Workforce by RBD