Depreciation On Asphalt Sealcoating Equipment: Tax Basics

We touched on depreciation of asphalt sealcoating equipment in our Smart Ways To Save Money In Your Asphalt Business This Season article, but did not go into detail. It's important to give you an idea of exactly what the tax benefit is, in simple, non-accountant words. This way you know exactly why it is so important to your asphalt business, and how it can help you pick the right time to buy new sealcoat equipment.

First And Foremost: I am not an accountant. I am a business owner, just like you. Talk to your tax office or accountant about what your depreciation rates will be for your business.

These are the basics to give you the simple know-how of depreciation.

Remember, just like you are an asphalt pro, and enjoy helping people with their driveways and parking lots, accountants enjoy helping interested business owners understand their finances.

What Is Depreciation All About?

When you buy asphalt sealcoating equipment, it costs you money, and you will be using it for years. So, instead of being able to write off the entire expense, you only get to write off a certain percentage of the cost per year. This is based on the expected lifespan and class. 

Wikipedia’s depreciation page is not easy to read, but has good information with links to specifics like MACRS  (Modified Accelerated Cost Recovery System, the IRS’s method of depreciation and tables.) and for Canadians, CCA (Capital Cost Allowance for the Canada Revenue Agency can be found on Wikipedia as well.

Section 179 Of The IRS Tax Code

Are you thinking about upgrading your asphalt sealcoating equipment with a bigger machine to expand how much work you can do?

As of 2017, under Section 179 of the IRS tax code, businesses can deduct the full purchase price of qualifying equipment bought before the end of the tax year. That means you can make a sound business decision while improving the quality of your work. Consider it a reinvestment in your company.

Calculate your potential savings below:

 

2019 Section 179 Tax Deduction Calculator

Enter cost of equipment: $
Assuming a tax bracket of:
Section 179 Deduction: $
Bonus Depreciation Deduction: (100% in 2019) $
Normal 1st Year Depreciation: $
Total First Year Deduction: $
Cash Savings on your Purchase: $
Lowered Cost of Equipment: (after Tax Savings) $

Budgeting Know-How

When you know what the depreciation rate of your asphalt sealcoating equipment, you avoid making bad financial decisions. You'll also know when your current asphalt sealcoating equipment is no longer a significant write-off and if it’s the right time to expand and purchase additional sealcoat equipment, vehicles, or computers.

Don’t Be Afraid To Learn The Basics Of Business Finances

Give your accountant a call (or start looking for one). Find out what the current, depreciated value is of all your sealcoat equipment, and what the percentage is for writing it off. Do your simple math to find out how much you will write off for your current asphalt sealcoating equipment this coming year.

For far too many asphalt businesses, this will be the first time they know and understand this info. Learning more about your finances and depreciation means more profit in your pocket and fewer dollars left on the table – and that’s a good thing for every business owner.

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