Considerations when buying business assets

Every business owner will reach a time when they have to think about buying business assets. Perhaps they need a fleet of laptops for their sales team, or maybe new company vehicles… or it could even be purchasing a commercial property.

The more significant the asset, the more carefully you should consider your options. If you just need a few desks and chairs because you’ve hired some new team members, that’s not too complicated a purchase… but if you are looking at investing in a factory because your manufacturing business is rapidly expanding, then it would be prudent to seek professional accounting services to help guide you through the process.

We look at some of the basic considerations you should think about when making high-value commercial purchases.

But purchasing your asset might be a more economical option in the long term.

For example, if a construction grapple costs $8,000 and you lease it for $300 a month over a three-year term, you end up paying $10,800… and at the end of the lease the machinery isn’t even yours to keep.

Another example for a construction company is large industrial vehicles. If you can own your excavator – rather than hire a different one for each project – it means your operators can become highly proficient with your specific machine.

This can improve their work efficiency because they don’t have to spend time on every job becoming familiar with a different vehicle.

There are a variety of tax implications around business asset ownership and this is certainly where a professional business accountant can help – especially with the current extensions in place for instant asset write-offs.

Essentially, business assets could accrue tax benefits if you purchase them outright.

According to the ATO, “You generally can’t deduct spending on capital assets immediately. Instead, you claim the cost over time, reflecting the asset’s depreciation (or decline in value).”

But there is a temporary full expensing measure that allows businesses, “with an aggregated turnover of less than $5 billion to immediately deduct the business portion of the cost of eligible new depreciating assets.”