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January 4th, 2019
Snow removal services can help landscaping companies and other warm-weather businesses maintain cash flow during the non-growing season. In this blog, we’ll talk about some of the financial considerations of adding or expanding a snow-removal component to your business. In the next section, we’ll discuss the pros and cons of financing or leasing snow removal equipment.
Financial considerations to adding or upgrading your snow removal equipment
Snow removal often means additional insurance expenses, especially if plowing is a part of it. In the eyes of an insurance company, plowing means you’re at an increased risk of filing a claim. Ask your insurance provider if lights and rear-mounted cameras on trucks would lower your premiums. It’s also important to make sure you carry enough liability insurance, so if someone slips and falls, you’re covered.
Plowing snow adds wear and tear to your vehicle, which is why it’s important to consider the possibility of higher maintenance costs.
Finding labor to cover snow removal shifts can be challenging, simply because the schedule is wildly unpredictable and demands long hours. With unemployment rates at a 49-year low, finding workers can prove even more difficult.
Is it better to lease or finance your snow removal equipment?
The decision to lease or finance your snow removal equipment depends on what your business needs along with your plans and goals. Use the following as guidance to help you reach the decision that works for your venture.
It’s often a point of pride to operate a debt-free business. But purchasing snow removal equipment with cash can snowball into a costlier decision later — especially if unexpected costs force you to tap into a line of credit. With lease agreements and equipment loans that come with fixed rates, you gain the ability to plan and control your ongoing expenses and keep your cash reserves freed up for other things.
Traditionally, leasing was the bigger advantage for equipment needs because entrepreneurs could report it on their taxes as a business expense. However, new tax rules under Section 179 open this option to entrepreneurs who finance their equipment. Now, when you finance equipment, you can either claim it as a one-time expense, or choose the traditional route and take the deduction on an ongoing basis. Either way, financing now gives you more options. An accountant can help you determine which is best for you and your business.
Borrowing is expected to get more expensive in 2019. Most economists predict three interest rate hikes in 2019, courtesy of the U.S. Federal Reserve. That means if you postpone your decision to acquire or upgrade your snow removal equipment, it will cost you more money later. If you’re maintaining old and outdated equipment and an upgrade is less than three years away, now is the right time to make your move.
You can apply online and get fast answers from Advance Acceptance. Features such as electronic signatures make financing your equipment fast and secure, without the hassle of paper.