Posts in ARTICLE
ARTICLE: MAXIMIZE YOUR EQUIPMENT PURCHASING POWER - SECTION 179
2018 section 179 deduction example

What is the Section 179 Deduction

Most people think the Section 179 deduction is some mysterious or complicated tax code. It really isn’t, as you will see below.

 

Essentially, Section 179 of the IRS tax code allows businesses to deduct the full purchase price of qualifying equipment and/or software purchased or financed during the tax year. That means that if you buy (or lease) a piece of qualifying equipment, you can deduct the FULL PURCHASE PRICE from your gross income. It’s an incentive created by the U.S. government to encourage businesses to buy equipment and invest in themselves.

 

Several years ago, Section 179 was often referred to as the “SUV Tax Loophole” or the “Hummer Deduction” because many businesses have used this tax code to write-off the purchase of qualifying vehicles at the time (like SUV’s and Hummers). But that particular benefit of Section 179 has been severely reduced in recent years (see ‘Vehicles & Section 179‘ for current limits on business vehicles.)

 

However, despite the SUV deduction lessened, Section 179 is more beneficial to small businesses than ever. Today, Section 179 is one of the few government incentives available to small businesses, and has been included in many of the recent Stimulus Acts and Congressional Tax Bills. Although large businesses also benefit from Section 179 or Bonus Depreciation, the original target of this legislation was much needed tax relief for small businesses – and millions of small businesses are actually taking action and getting real benefits.

Here’s How Section 179 works:

In years past, when your business bought qualifying equipment, it typically wrote it off a little at a time through depreciation. In other words, if your company spends $50,000 on a machine, it gets to write off (say) $10,000 a year for five years (these numbers are only meant to give you an example).

 

Now, while it’s true that this is better than no write-off at all, most business owners would really prefer to write off the entire equipment purchase price for the year they buy it.

 

And that’s exactly what Section 179 does – it allows your business to write off the entire purchase price of qualifying equipment for the current tax year.

 

This has made a big difference for many companies (and the economy in general.) Businesses have used Section 179 to purchase needed equipment right now, instead of waiting. For most small businesses, the entire cost of qualifying equipment can be written-off on the 2018 tax return (up to $1,000,000).

Limits of Section 179

Section 179 does come with limits – there are caps to the total amount written off ($1,000,000 for 2018), and limits to the total amount of the equipment purchased ($2,500,000 in 2018). The deduction begins to phase out on a dollar-for-dollar basis after $2,500,000 is spent by a given business (thus, the entire deduction goes away once $3,500,000 in purchases is reached), so this makes it a true small and medium-sized business deduction.

Who Qualifies for Section 179?

All businesses that purchase, finance, and/or lease new or used business equipment during tax year 2018 should qualify for the Section 179 Deduction (assuming they spend less than $3,500,000).

 

Most tangible goods used by American businesses, including “off-the-shelf” software and business-use vehicles (restrictions apply) qualify for the Section 179 Deduction.

 

For basic guidelines on what property is covered under the Section 179 tax code, please refer to this list of qualifying equipment. Also, to qualify for the Section 179 Deduction, the equipment and/or software purchased or financed must be placed into service between January 1, 2018 and December 31, 2018.

What’s the difference between Section 179 and Bonus Depreciation?

Bonus depreciation is offered some years, and some years it isn’t. Right now in 2018, it’s being offered at 100%.

 

The most important difference is both new and used equipment qualify for the Section 179 Deduction (as long as the used equipment is “new to you”), while Bonus Depreciation has only covered new equipment only until the most recent tax law passed. In a switch from recent years, the bonus depreciation now includes used equipment.

 

Bonus Depreciation is useful to very large businesses spending more than the Section 179 Spending Cap (currently $2,500,000) on new capital equipment. Also, businesses with a net loss are still qualified to deduct some of the cost of new equipment and carry-forward the loss.

 

When applying these provisions, Section 179 is generally taken first, followed by Bonus Depreciation – unless the business had no taxable profit, because the unprofitable business is allowed to carry the loss forward to future years.

Section 179’s “More Than 50 Percent Business-Use” Requirement

The equipment, vehicle(s), and/or software must be used for business purposes more than 50% of the time to qualify for the Section 179 Deduction. Simply multiply the cost of the equipment, vehicle(s), and/or software by the percentage of business-use to arrive at the monetary amount eligible for Section 179.

3 THINGS TO LOOK OUT FOR WHEN BUYING A USED WALK-BEHIND POWER TROWEL

Buying a used piece of equipment can be a great way to save money if you know what to look out for. Otherwise, it could end up turning into a waste of your money and time. Buying used Walk-Behind Power Trowels are no different, so how do you make sure that you’re on the winning side of this transaction?

There are 3 simple things to look out for when looking at used Power Trowels to help you weed out the quality pieces from the lemons. Because the nature of equipment can be unpredictable, it can be hard to tell what may or may not be wrong. The tips that we highlight are not a 100% fool proof, and are only meant to help you identify some red flags. Remember that whenever you buy something used without a warranty, you are taking a bit of a risk.

TIP # 1: CHECK FOR OIL & GREASE

One of the things that will help to keep Walk-Behind Trowels running smoothly for years, is proper oil and grease maintenance. If you are looking at a Power Trowel and there are no signs that those two things have been properly maintained, you could run into some problems down the road. The main areas to check for oil are:

  • Gearbox (There should be a place to see where the level currently is)
  • Engine

If either of these look dry or under-oiled, take some caution. Lack of oil in these areas can result in your engine having major issues, and the internal components of the gearbox compromised.

When looking for grease, check around the spiders. Those are the main grease points on a Trowel.

Checking for proper oil and grease maintenance will help you to asses the mechanical state of the unit, but also tells you a lot about how the owners have probably cared for the equipment. A lack of proper care and maintenance is something you want to stay away from, if possible.

TIP #2: PAY ATTENTION TO WEAR & TEAR

The way an operator has used the Power Trowel over the years is one of the most important things to try and asses and pay attention to. If the Power Trowel was treated poorly and not cared for effectively, it can drastically shorten the life and efficiency of the Trowel. As you inspect the Walk-Behind, pay close attention to any dents or bends on the spider arms as this may indicate that the unit has been dropped, or damaged during use.

Although you can't really know how someone used their Walk-Behind Trowel over the years, one of the tell tale signs is the overall state of the machine. If the unit looks like it has been beaten up and not cared for, it's most likely true.

This can indicate the owner has not been diligent with many important upkeep items, which could come back to bite you in the future.

TIP #3: LOOK FOR BRANDS THAT HAVE A GOOD REPUTATION

Not saying that this is the main criteria to use when looking for a used Walk-Behind Power Trowel, but knowing which brands have a good reputation for manufacturing trowels that last, are good ones to look for when buying used. If you're unsure of where to start, do some online and industry research before you begin looking.

Another great thing about buying a used Trowel from a known brand, is parts and product support.Depending on the age of the Trowel, they will be more able to assist you as issues come up since they will always have parts stocked for their older units in the market still being used.

Buying used equipment can be a good option as long as you know what you are getting into. Before you buy used, you may want to check out what new Walk-Behind Trowel prices are, because you may find out that the "deal" you are getting with a use machine isn't really that good.

Hopefully after reading this blog you will be able to find a unit that fits your price point and is in a good enough state to accomplish what you need it to.

WHICH PLATE COMPACTOR SHOULD YOU USE?

Compaction is one of the most important processes in many applications. Whether you are laying pavers, asphalt, or concrete, using a plate compactor is vital to the longevity of the material. With all the different types of plate compactors on the market, it can be confusing to figure out which one is right for your application.

There are a few different ways to figure out which compactor you should be using that we will go over in this blog. This is a very important part of your job to get right because the consequences of having improper compaction can be really bad. When the base shifts you can run into many big issues that cost time and money down the road.

Let's get into some of the ways you can figure out which Plate Compactor is right for you job.

HOW MUCH COMPACTION FORCE DO YOU NEED

This is probably one of the most important aspects to pay attention to when you are selecting a compactor to use. Depending on the base material that you are putting down and how is down will determine the compaction force that you need for proper compaction.

Make sure that you know what compaction force is needed for you job. Under-compacting can cause some serious problems down the road and although it may feel like you are saving some money by purchasing a smaller plate compactor, the issues it can cause in the future will eat those savings.

WHAT SIZE IS THE AREA YOU ARE COMPACTING?

The size of the area is a large factor as well when selecting which compactor you should use. A bigger plate obviously covers more ground per pass, but travel speed also comes in the equation. Different compactors with have different travel speeds that are measure in ft/min.

This is an important thing to pay attention to along side the size of the plate. If you have a slightly bigger footprint, but the travel speed of the plate compactor is much slower than another unit, the bigger footprint may not be doing you any favors. You should be able to simply calculate what the difference in production is.

One important thing to remember is to buy a plate compactor that suits well with the average size of job that you normally do. If you purchase a unit that is based off a one-time need, you may end up with something that does not fit well for the other parts of your business.

WHAT FEATURES DO YOU WANT?

Most plate compactors are fairly basic machines that have very similar features. The main differences are between forward and reversible options. As you may think, the main difference between those plates is that a forward only goes in a forward direction and a reversible plate can go in both directions.

Depending on the type of compaction that you are doing and the layout of the job site will determine which features may be more helpful for you. Generally reversible plates will be better in tighter areas as you don't have to turn the machine around, but you can just walk backwards.

Another features to pay attention to is the shape of the plate. The shape of the plate can help you manever around different obsticles and move around in tighter spaces easier. 

There are some limitations with the different types of plate compactors, mainly the compaction force. Forward plates only offer so much compaction force, while reversibles can offer much more force with larger units.

After you evaluate what you really want and need out of your compactor, you should have a pretty clear understanding of what unit will help you our best.

STANDARD PITCH VS. EASY-PITCH - WHICH ONE SHOULD YOU USE ON YOUR WALK BEHIND TROWEL?

When talking about Walk Behind Power Trowels, the term"pitch" is referring to the angle that the trowel blades sit against the floor. The pitch of the blades should change as the finishing process progresses, and the concrete changes. In the past, there was a standard way that you pitched trowel blades, but over the years other ways have been developed. Depending who you talk to will determine which answer you get on what ways are the best. At the end of the day it comes down to preference.

So, how do you know which pitch option is right for you? In this blog, we will highlight a few things to ask yourself that will help steer you in the direction best for you.

DO YOU LIKE A LOT OF CONTROL OVER THE PITCH OF YOUR BLADES?

Standard or Fine Pitch, as it is sometimes referred to, generally offers more fine tune adjustment than the Easy-Pitch. A lot of concrete finishers that have been in the industry for a long time still tend to prefer the standard pitch for this vary reason. They feel that it gives them more control over the pitch of the blades, giving them the result that they want.

This isn't to say that an Easy-Pitch doesn't offer enough control over the blades, just not as much as the Standard Pitch. The reason that there is more control with a Standard Pitch is because of the technology that it uses. The Standard Pitch uses a knob that doesn't have set positions, where the Easy-Pitch has set positions that the blades will be set at.

If you have been finishing concrete for many years and are use to the adjustments that Standard Pitch offers, then I would recommend you stick with it unless your looking for a change. The Easy-Pitch will be easier overall to pitch the blades with, but you will sacrifice some fine adjustments that may be important to you. If you are newer to using Walk Behind Power Trowels, the Easy-Pitch may be a good option. This is where a lot of the industry is going and it is an option many people love.

EASE OF USE

Both type of pitch options are quite simple to use. Easy-Pitches would be considered easier to use because the process is quicker. All you need to do is depress the handle and then move the handle to the desired position. When using Standard Pitch, it can take a while to turn the knob to get the blades from being not pitch to being fully pitched.

This is not a huge element, but when you are troweling for long periods of time, it can be helpful to have something that is easier to use.

PRICE

Different pitch options normally will change the cost of the trowel you are buying. Depending on how much this option means to you, will determine whether you think that it is worth it. The option to have an Easy-Pitch will normally cost a few hundred dollars extra.

Some power trowel manufactures make you buy a whole new handle in order to incorporate an Easy-Pitch, while others have a bolt on kit to an existing handle. This will also drastically change the cost of this option.

The different pitch options available both get the job done at the end of the day. It really comes down to your preference and what you are used to.

Credit for this article goes to Chris Windsor.

3 FEATURES YOU NEED TO HAVE ON YOUR FORWARD PLATE COMPACTOR

Forward Plate Compactors are used for compacting many different kinds of base materials when prepping for concrete, pavers, and many other types of applications. Compaction is one of the most important parts in the construction process. Poor compaction can lead to the base shifting over time which can ruin an entire project.

In this blog, we are going to highlight 3 features that are extremely helpful to have on a forward compactor. The following features will make using the compactor much easier, and help when moving it around jobs.

WHEEL KIT

Wheel kits are an add-on that is often overlooked when comparing units. Although the wheels only work well in some applications, they are fantastic for moving plate compactors around the shop, showroom, and even many job sites. Depending on the type of units that you are looking at buying or renting, you may notice some come with a wheel kit included and others are available at an extra upgrade cost.

Whatever unit you decide to go with, getting it equipped with a wheel kit is a great option that will make moving the plate compactor around much easier and save you time over the long run.

HANDLE MOUNTED THROTTLE CONTROL

Most Forward Plate Compactors have the throttle control located on the actual engine. This is an awkward position, especially when you are needing to stop the unit after you are finished compacting. Also, having to bend down and stop the unit while it is still moving forward can be a safety hazard. We suggest using a forward compactor that has the throttle control mounted on the handle. Even though this is a simple feature, it eliminates the need to bend down and trying to stop the unit while it's still moving. A handle mounted throttle control makes the overall operation of forward plate compactor much easier and safer.

BUILT IN HOIST HOOK

A secure and trustworthy lifting point on a plate compactor that wont slip, is a necessity. This is usually a standard feature offered on most plate compactors, but sometimes it is an upgrade and extra cost. Make sure to keep an eye out to see if it come's standard or if you'll need to purchase the upgrade.

These features may seem small, but they will add to the overall experience and benefit of your forward plate compactor. Make sure you compare these key features when you are researching what unit may be good for you.

Credit for this article goes to Chris Windsor.