Planning for Year-End 2024 Budgets: 6 Reasons How Equipment Purchases Can Benefit Your Business
As 2024 winds down, it’s time to start thinking about year-end budgets and how strategic decisions can set your business up for success in the coming year. One key consideration is capital equipment investment, which can significantly impact your company’s growth, productivity, and bottom line.
Here are 6 reasons why purchasing equipment before the year ends could be one of the smartest moves for your business and how it fits into your year-end budgeting strategy.
#1 – Take Advantage of Section 179 Tax Deduction
If you haven’t already considered Section 179 of the IRS tax code, it’s time to do so. This deduction allows businesses to write off the full purchase price of qualifying equipment in the same tax year. This can provide immediate tax relief, reducing your taxable income for the year.
By purchasing equipment before December 31, you can:
- Deduct the full cost in 2024 instead of spreading it over years of depreciation.
- Lower your tax liability for the current year.
- Reinvest the tax savings back into your business for growth and expansion.
#2 – Preserve Cash Flow with Financing
Cash flow is critical, especially as you approach the year-end. Financing equipment through equipment finance agreements, loans, or leases can help preserve your working capital. Financing allows you to:
- Spread out the cost of equipment over time.
- Manage monthly payments, aligning with your budget cycles.
- Maintain liquidity for other business priorities.
By locking in financing now, you can secure equipment, avoid potential price increases, and still benefit from tax deductions for 2024.
#3 – Prepare for 2025 Growth
Investing in new or upgraded equipment at year-end positions your business for a strong start in 2025. Modern machinery, technology, or vehicles can enhance operational efficiency, reduce downtime, and increase productivity.
When planning your budget, consider how equipment purchases can help you:
- Expand production or service capabilities.
- Enter new markets or handle increased demand.
- Stay competitive by leveraging the latest technology or improved functionality.
#4 – Minimize Disruption to Operations
The final quarter of the year is an ideal time for equipment acquisition. Many businesses experience slower periods at the year-end, making it an opportune time to integrate new assets without major disruptions to operations. This ensures that by the time business picks up in the new year, your equipment is up and running, and your team is fully trained.
#5 – Lock In Current Pricing
Inflation and supply chain issues have caused unpredictable price fluctuations in recent years. By purchasing equipment now, you can lock in current pricing, avoiding potential cost increases in 2025. Many manufacturers and vendors also offer year-end discounts and promotions, further stretching your budget.
#6 – Accelerate Depreciation with Bonus Depreciation
In addition to Section 179, bonus depreciation allows businesses to deduct a percentage of the cost of equipment in the year it’s put into service. For 2024, the bonus depreciation rate is 80%. This is particularly useful for businesses that exceed the Section 179 spending cap or purchase large amounts of qualifying equipment.
Key Steps to Take Now
If you’re considering purchasing equipment before the year ends, follow these steps to maximize your benefits:
- Review your budget: Identify areas where new equipment can improve operations or support growth.
- Consult with your tax advisor: Determine how Section 179 and bonus depreciation apply to your specific situation.
- Explore financing options: Work with an equipment finance provider to find the best payment structure for your business.
- Get started now: With supply chain issues still affecting many industries, don’t wait until the last minute. Starting the process now ensures you can get the equipment in time to qualify for 2024 tax benefits.
Conclusion
Year-end equipment purchases can provide substantial tax savings, improve efficiency, and set your business up for growth in 2025. By taking advantage of Section 179 and other available deductions, along with flexible financing options, you can make the most of your budget and close out the year on a high note.
