A New Year's Resolution

It’s the start of a new year, and that should have you thinking about your plan for the future. Maybe your New Year’s resolutions included making more money, or reducing stress, or spending more time on yourself? Any accountant, investor, or business guru will tell you what you already know to get the things you want; have a solid plan for your investments to ensure your success in life and business.

The first quarter of the year is a great time to start planning how to invest your money. Your options for investments are staggering. What is the best place for you to put your money? Stocks? Bonds? Mutual Funds? All of these have their advantages and draw backs, but if you really want to see a return on your investment, consider investing in yourself.

Benefits

Your practice is your life, wouldn’t you like to get more out of it?

Drawing in more patients is sure to improve your practice and your profits. Updating, replacing, or adding equipment to your office will keep your life and profits running smoothly. Making these purchases in the first quarter of a new year can be very advantageous. Keith E. Heil, CPA,PFS, points out these benefits of investing in yourself early in the year:

• Purchases of equipment in the 1st quarter of the tax year could be expensed and therefore minimize or eliminate the need for federal or state 1st quarter estimated income tax payments. You could defer and potentially minimizing the payment and amount of income taxes. Depending on the amount of the purchase, income, and other factors, the 1st quarter purchase could even minimize estimated tax payments into the 2nd quarter as well.
• Purchasing or leasing business equipment in the first quarter provides you a great time to launch new techniques, services, procedures, and an opportunity to capture growth throughout the entire year. Alignment with your business plans, budget and growth model is critical... budget for success, acquire the necessary equipment early and use it throughout the entire year.
• You could think of an operating or tax lease as a means to purchase the equipment in the first quarter. A lease in the first quarter potentially requires less upfront cash and cash payments equal tax deductions. This can preserve your $125,000 equipment expensing election until later in the year. If you have a good year, then a big tax deduction is still available for 3rd and 4th quarter purchases.
• You can minimize or eliminate the depreciation freeze caused by too may purchases in the 4th quarter. Normally you get to deduct 50% a year’s depreciation for a piece of equipment in the year purchased. However, if you purchase too many assets (40% or more) in the 4th quarter that figure drops to 12.5% of the depreciation value. It can be costly to wait.
• If the value of the equipment being purchased is greater than $125,000, consider using the 4th quarter of the first tax year and the 1st quarter of the second tax year. This spreads the purchase over two tax years and allows you to expense most all of the purchase under IRC Section 179. This should give you a quicker and bigger tax deduction.

Would you like more specific numbers of what kind of return on investment you can expect from your purchases? Goetze Dental has worked up four examples from our current sales event to help illustrate how much your money could be worth if you spend it on yourself.

Sales Event Examples