Renting VS Buying Tools
We began our discussion a few months ago about whether leasing or buying equipment, vehicles, and tools was the right choice for your business.
Please refer to our previous “Leasing vs Buying Equipment” video and blog
Please refer to our previous “Leasing vs Buying Vehicles” video and blog
What are “Tools”?
Lower-cost items needed to do your job:
- Screwdrivers
- Drills
- Sewer cameras
- Refrigerant captures
When do you buy?
Most of the time, you will want to buy tools.
- Less than $500
- Often less than $1000
- You will find a use for it in the future as well.
- Keep them clean and in good working condition, and they will last for years.
- The cost of renting tools each time you need to use them will be more than the cost of just purchasing them and keeping them on hand.
When do you want to rent?
Larger, more expensive items
- Items that cost more than $1,000
- Items you will use only once or very infrequently
- Sewer cameras
- Scopes
- Leak finding machines (such as the ones plumbers work with)
- Heavy-duty drills
- Jackhammers
Deciding Factors
How expensive is this tool, and how often will I use it?
If it is very expensive, but you will only use it once or twice.
If I purchase a larger-ticket specialty item, will this allow me to expand my business and take on more work?
Do I have enough space to store this tool?
I only have a small shed in the backyard that is already full.
Will I be willing to clean and maintain it so that it will last?
Tax Benefits
If the tool is less than $1,000, it will be expensed on your tax return the year you purchase it.
If this is a large ticket item, it will be added to your Chart of Accounts, and you will be able to expense Depreciation over its life.
Contact Us
You can like and subscribe to our channel to stay up to date on the YouTube videos we put out.
If you are looking for more help, whether to rent or Buy Tools for your company, what your best options are, or if you even have the cash flow to invest in Tools, please feel free to reach out to us here at Waterford Business Solutions. You can call us at 864-351-0852 or send an email to info@waterfordbusines.com.
Additional Resources
For more information on IRS requirements, please check out the IRS website: https://www.irs.gov/
For more detailed information on Depreciation, please check out the IRS website: https://www.irs.gov/taxtopics/tc704.
