Maximizing Business Growth: A Guide to IRS Section 179 and Equipment Financing

For small businesses, acquiring the right equipment is often the catalyst for growth. However, the upfront costs can be a significant hurdle. By leveraging IRS Section 179 in conjunction with equipment financing, business owners can acquire the tools they need while simultaneously reducing their tax burden and protecting their cash flow.

What is IRS Section 179?

IRS Section 179 is a tax code designed to help small businesses grow by allowing them to deduct the purchase price of qualifying equipment or software.

For the 2023 tax year, businesses can deduct a portion of the purchase price of qualifying equipment or software—whether purchased outright or financed—up to a limit of $1,160,000. This incentive is a simple and effective way to fit essential equipment into a growing business budget.

The Benefits of Combining Financing with Section 179

Combining equipment financing with the Section 179 deduction offers several strategic advantages:

• Improved Cash Flow: Financing allows you to acquire equipment without high upfront costs, leaving cash available for other operational expenses.

• Reduced Tax Liability: You can deduct a portion of the equipment's value in the year of purchase, which directly reduces your overall tax bill.

• Preserved Credit Lines: By using dedicated equipment financing, you keep your existing credit lines open for other needs, such as expansion or emergencies.

• Financial Predictability: Financing typically features fixed monthly payments, which makes long-term budgeting much easier.

• Immediate ROI: Getting equipment quickly means you can start generating profit immediately without depleting your cash reserves.

Real-World Example: Tax Savings in Action

To understand the impact, consider a business purchasing equipment worth $20,000. Under Section 179 (assuming a 21% corporate tax rate), the savings are substantial:

• Equipment Cost: $20,000
• Section 179 Deduction: $16,000
• Tax Savings (at 21% Corp Tax Rate): $3,360
• Lowered Net Cost of Equipment: $16,640

Note: This example is for informational purposes; actual savings vary based on individual tax situations.

Financing Solutions with CAN Capital

If you are ready to invest in your business, CAN Capital provides flexible financing options for both new and used equipment.

• Funding: Up to $250,000.

• Terms: Flexible terms ranging from 24 to 72 months.

• No Credit Impact: CAN Capital performs a soft credit pull, so there is no impact on your credit score during the application.

• Speed: The application process is fast, with responses often delivered as quickly as the same business day.

Important Disclosures

This material is for informational purposes only and does not constitute tax, legal, or professional advice. Please contact your tax, legal, or financial advisor regarding your specific tax liabilities and counsel. CAN Capital, Inc. makes capital available through business loans made by WebBank and equipment financing through various providers.

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