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. Before you claim these write-offs, we recommend that you talk to your tax office or accountant about what the 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 also 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 likely 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 as the equipment depreciates. This write off is based on the expected lifespan and class of the equipment.
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 any qualifying equipment bought before the end of the tax year. That means you can make a sound financial decision for your business while improving the quality of your work. Consider it a reinvestment in your company.
Calculate your potential savings below with Section 179:
