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5 Ways for Business Owners to Reduce Their Taxable Income

The Internal Revenue Code allows for a wide variety of options to save money on taxes, encouraging entrepreneurs to create jobs and invest in thier businesses.

We do not recommend spending money for the sole purpose of reducing your taxes. However, you are likely to benefit from smart spending. Here are some popular solutions to lower your tax liabilities and save money for your business.

Tax Credits

The federal government offers tax credits and tax breaks that drive business owners to make decisions that improve the overall American economy. Actions such as hiring employees, creating an accessible environment for people with disabilities, shifting to emissions-free technologies, and even offering health coverage for employees can qualify you to save money on taxes.

Qualified Business Income (QBI) Deduction

You may qualify to deduct 20% from the QBI if your business is an S-Corp, a partnership, or a sole proprietorship. This deduction comes additionally to your regular deduction of business expenses. You could qualify if your taxable income is under $157,500. The amount goes up to $315,000 if you are filing a joint return with your spouse.

Write Off Bad Debt

Unfortunately, some customers may never pay for what they purchased on a note. The last quarter is the perfect time to identify those receivables and write them off to save money on taxes this year.

Fund a Retirement Plan (For Yourself and Employees)

Adding money to an Investment Retirement Account such as 401(k) and 403(b) free you from taxation up to a certain amount every year. The share of income put in an IRA is usually tax-free until you withdraw it. Consider consulting a tax advisor to make sure you qualify.

Section 179 and Bonus Depreciation

Business assets such as machinery, vehicles, and other equipment can qualify for a Section 179 deduction. This part of the IRS Code allows your business to write off up to $1,040,000 of the equipment cost in the first year. You can take advantage of this rule until you reach $2,590,000 for the year.

The additional bonus depreciation also offers a tax break of 50-100% on equipment cost. The current bonus depreciation rules are valid until January 1, 2023.

Please, note that you must put the newly acquired equipment in use by December 31 to take advantage of these tax benefits.

Note

Other restrictions may apply to the tax breaks explained in this article. Check if you are eligible with your tax advisor.

We Can Help

Alliance Funding Group offers equipment leasing solutions that qualify for Section 179 deduction.

Get a custom-tailored quote this year and save money on taxes.

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4 Ways to Avoid Equipment Obsolescence

According to the law of accelerating returns, the speed at which technologies improve doubles every ten years. The equipment we consider cutting-edge today is likely to become uncompetitive or even obsolete in just a few years. That is unsettling news for businesses that rely on high-tech solutions.

How to avoid equipment obsolescence?

Companies rely on stable cash flow and planned capital expenditures to stay on budget. We have identified four ways that can help you keep up.

1. Monitor the value of your equipment

Equipment can make up a large share of a company’s total assets. Companies that employ complex technological solutions have to pay special attention. It is crucial to identify the right moment to upgrade. As new generations of tech are being launched, the market value of older equipment drops.

Sometimes, an early upgrade will help avoid depreciation losses in the future, while the freed-up funds will provide for a wider range of procurement options.

2. Lease your equipment

Equipment leasing solutions offer beneficial ways to upgrade because you get a choice of options at the end of the term. For example, you can

  • Purchase the equipment at market value
  • Keep leasing with lower monthly payments
  • Return the equipment and upgrade

Leasing is faster than using a bank loan and requires little to zero money upfront. That allows swift upgrades on a budget and helping to avoid equipment obsolescence within your business.

3. Keep track of your working capital

Working capital is the net amount of current (liquid) assets that your business has. Maintaining a positive working capital balance is not just a general best practice. The available cash reserves can be used to secure a good deal on equipment on short notice, saving lots of money in perspective.

Thousands of companies in America use working capital loans or lines of credit that allow extra flexibility in thier business. For example, at AFG, we can provide up to $250,000 of unsecured funds in just 24 hours.

4. Mind the tax returns

No one enjoys the topic of taxes unless it is about deductions. According to Section 179 of the IRS Tax Code, you can deduct up to $2,590,000 of the total equipment price in 2020. You can take advantage of this regulation every year, but only up to the set limit. That is another reason why timely upgrades can preserve your company’s budget.

Running a business comes with much effort and responsibility. Choosing simple financial solutions can help you avoid equipment obsolescence and generate better returns on capital-heavy purchases.

Chat with an experienced Account Manager to learn more about quick and easy equipment financing & leasing options for your business.

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AFG Funds a Transportation Company Despite COVID-19 Related Challenges

  • Approval for a transportation company, a restricted industry among lenders due to COVID-19
  • Helped avoid lay-offs by providing quick funding
  • The client received enough funds to stay open as its SBA relief application is being reviewed

As American businesses are experiencing hardships in Q2 and Q3 of 2020, Alliance Funding Group helps small and medium-sized companies retain their financial welfare.

AFG’s Unsecured Working Capital Program has seen an increased demand in the past few months. Our VP of Working Capital Products, Mike Amezquita, has shared some details on a recently funded deal.

Solution

Courtesy Transportation out of North Carolina is a current leasing client of Alliance Funding Group. It has applied for government funding, provided by the Small Business Administration, to support its operations and cover payroll expenses. However, the waiting time for such loans is currently measured in months.

Mike worked with the company to help them bridge the gap before the expected government aid arrives sometime in the summer. He was able to secure an approval for up to $40,000 and up to 9 months with manageable weekly payments.

“I’ve been working in financing for over 6 years. I understand the equipment and typical challenges that passenger transport and hauling companies face. Courtesy Transportation among hundreds of our customers rely on AFG’s resources and experience to efficiently run thier businesses. I do my best every day to answer questions, educate them on financing and leasing products, and fund deals fast.”

Mike Amezquita, VP of Working Capital Products

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Here is Why Healthcare Vendors Choose AFG

In light of recent events, manufacturers around the world are adjusting their production lines, while healthcare providers stock up on crucial equipment.

Alliance Funding Group has been funding projects for healthcare providers of all sizes and specialties: from single practitioners to hospitals, since 1998.

We pride ourselves in our strong partnerships and excellent customer care that help vendors in the healthcare industry attract, secure, and retain more business.

“We have a lot of experience in the space and understand the equipment, business needs, and the fast-paced environment in the healthcare industry. We stay available after hours and on weekends to make sure we can execute and fund projects quickly and efficiently. We are the extension of our partners’ sales team.”

– Mike Harmon, VP of Sales

AFG’s Competitive Offer

We fund a multitude of business needs in the healthcare industry. Being privately owned allows us to offer creative lease structures that perfectly suit our clients’ demands.

Special vendor rates start at only 3.99% on capital leases. Human underwriters and consistently swift funding make AFG one of the most competitive resources for healthcare businesses. We offer 110% financing to cover soft costs such as delivery, installation, software, and taxes.

Besides, we extend the Unsecured Working Capital Program to help providers address their short-term monetary needs within 24 hours. Many equipment leasing and EFA approvals automatically include an option for unsecured credit access for our customers*.

Healthcare Equipment and Supplies Vendors Choose AFG

Numerous companies in the space consistently choose AFG to fund their equipment and supply needs.

Alliance Funding Group remains fully operational throughout 2020. We are offering step-up and deferral options to help American practitioners and health centers provide the best possible patient care during these unprecedented times.

Join our Vendor Program and get access to experienced salesforce, and the ability to fund various credit profiles with the starting rate as low as 3.99% on capital leasing for your customers.