YOUR TAX BILL
Is your tax bill looking scary? |
When a lease is structured correctly, it can provide a potential tax benefit. That's because the lease payment is a fixed expense and it is paid out of gross profit (Pre-Tax Dollars). The payments reduce the taxable gross profit; therefore the tax bite is reduced.
If a business entitiy is in the 34% tax bracket (Maximum Corporate Tax Rate), it will save 34 cents in taxes on every dollar it pays in the lease payment (Sales Tax included).
Here's the example:
Click on the example to enlarge
In effect, Uncle Sam is picking up 1/3 of the total cost. In addition to the potential tax benefit, a lease requires no down payment or large cash outlay. Lease financing is 100% financing which means the business entity will preserve its cash and its lines of credit for its working capital needs.
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