When you begin planning your new business, you may wonder about where the money will come from for equipment. If you need equipment in your business, you will likely consider a small business loan in order to finance this equipment. You should note however that there is another way to meet your equipment needs without going into debt, even if only for a short period of time.
You can use your own personal assets, if you have them, to run your business and this can be very beneficial with regards to taxes. If for instance, you need computers to run your business and you have a desktop or laptop, or both, that you can use, this will help to lower your overall start up expenses. Using your personal assets for your new business can reduce your acquisition needs. It can also help to reduce your annual tax bill.
This goes for all of the needed equipment that you may already have at home. You can use your own vehicle, office furniture, computer equipment and anything else that you have that your business will need to get started. Even if you only use this equipment for a short time, it helps you to save money in the beginning and when your business has begun to show a profit, you can purchase new equipment if you want.
If you are a sole proprietor, using your personal assets for business is easy. You simply begin using them. You will need to figure out the depreciation value however, so you will want to know how much you paid for the item originally. You can also continue to use those assets for personal use. You will simply need to keep track of how much time you spend using them for personal use and for business use. When you begin your income taxes for the year, your accountant will want a clear picture of how much each item has been used for your business purposes as opposed to your personal needs. You will receive a deduction for depreciation for business use, but not for personal use. So, you will want to keep good accurate records of the equipment that you are using, the original cost of that equipment and how much time each piece is used for your business so that you can be certain to get the best tax advantage for using your personal assets.