My crystal ball is no better than that of any of the other pundits, prophets or prognosticators that you may hear from on a regular basis. So let me begin this commentary by suggesting that you do like I did: Consult with your accountant before acting on any of my words of wisdom, or those of anyone else for that matter!
By most accounts, the nation's economy continues a slow but steady recovery. Speaking with roofing contractors and others in the industry around the country, some say the "recession" should have been called "depression." Some still haven't received the memo about the recovery. Others will say, "What recession? I have been busy since the 90s."
No matter what your business or your local economic situation is at the present, we all find ourselves approaching the end of a very interesting year. The year was made even more interesting by a federal government intent on shoring up an ailing economy and cranking up the employment engine. To that end, the Feds have put together some interesting tax benefits for those able to take advantage.
However, the time you have to act on some special tax incentives for 2003 is nearly gone.
There are plenty of opportunities, ranging from special deductions for business losses to help for small businesses establishing a retirement plan for the first time. One of the most intriguing, particularly for some roofing contractors, is the quadrupling of the Section 179 expense deduction for new business equipment and furniture purchases.
The 179 expense deduction has been in effect for years. In essence, it has allowed you to deduct up to $24,000 when purchasing new business equipment rather than depreciating it over so many years (depending on many factors). For 2003, 2004 and 2005, the Section 179 expense deduction has been expanded to $100,000, and is set to return to the previous levels after that, with possible adjustments for inflation. Again, check with your accountant for the details.
A few months back I heard from my friend, roofing contractor Allen Bonner of ABC Maintenance Services Inc., Savannah, Ga. He was looking for a truck crane and asked for the name of a manufacturer, and I gladly obliged. Some weeks later I heard that Bonner had made the investment so I called just to check and see how that was going. Aside from the usual start-up challenges that arise from putting any major piece of equipment to work, everything with the crane acquisition was going fine, and he was pleased.
I then asked him if he was able to take advantage of the expense deduction, and he responded that it had indeed made a difference. He said, "It was the straw that broke the camel's back." Bonner had considered all aspects of the purchase and decided it was a good fit in his business, but the added tax relief pushed him over the edge to make the purchase this year rather than wait.
Do you believe in your own ability to take advantage of the opportunities coming as this economy recovers? If you do, it is certainly a great time to invest in capital equipment. And if you can receive a small five-figure discount on your 2003 taxes, might it not be a good idea to go ahead and pull the trigger now on that new crane, computerized metal-folding machine, or roll former?
