When you own a business, upgrading or replacing the equipment that you use can be quite costly. With this in mind, there may be times when you prefer to delay this cycle in order to save up for the purchase first. However, there are instances wherein it makes more sense to buy new equipment rather than stick to your old ones. Here are four signs that it’s time to upgrade:
1. Significantly better equipment becomes available. If a piece of equipment could help you do your job better or faster, then it only makes sense for you to purchase new business equipment. Let’s say for example that you are a photographer, and a new camera has been launched that performs significantly better than your current one. If you think that the performance increase is significant enough that it will subsequently increase your business turnover as well, then go ahead and buy new gear. Of course, this applies not only to photographers but any business owner who heavily relies on equipment for turnover.
2. You are ramping up your operations. Another sign that you may have to buy new equipment is when your current range can no longer keep up with the demand that your business is facing. This could be in the form of a new factory or machine, or alternatively in an office job this may be the capacity and speed of your computer.
3. When the cost of maintenance is increasing. Naturally, your business equipment needs to be maintained regularly, but when the costs are rising, and the difference between that and buying a new one is fairly negligible, then it’s high time for you to upgrade or replace it. There are several benefits to this. For one, you’ll be much more productive, since you’re no longer wasting time on downtime and repairs, plus your business will save money on these repairs so that you can use the savings for other important expenses.
4. To take advantage of tax breaks. An example of this happened in the 2012 fiscal year when the government offered an automatic tax deduction of $6,500 to eligible businesses. If this is the case with you, then it is a massive write-off that you could take advantage of. For more information about tax breaks that your business is eligible for, speak with your accountant.
As well as tax breaks on the purchase price, newer equipment also has greater depreciation allowances than older ones. This means that you could claim higher tax depreciation at the end of the fiscal year by buying a new piece of equipment.
Buying new equipment requires careful consideration on your part. This is where your accountant and financial adviser may be able to help you. You should also seek the advice of a mortgage broker, who can assist you in accessing the funds required to purchase your new business equipment and help take your business to the next level.