Is paid for equipment better or is depreciation?

After you pay off your truck. Purchase another asset you can depreciate.

Mentioned earlier. I prefer to pay taxes than loan interest.

Bottom line if you have to pay income tax. It means you're making a profit. That's a good thing.

 

THIS^^^^

 

Paid off is a matter of cash flow. You can depreciate a truck using section 179 deduction in one year, or spread it out over five. Depreciation is a matter of tax strategy.
What the accountant is saying is that you should buy assets so you can depreciate them to reduce taxes. Again, you can do that with cash or payments.

However, accountants are often confused, and believe the point of business is to pay as little taxes as possible. The real purpose of business is to take as much money home as possible. The amount of taxes you pay is immaterial: the only relevant metric is how much money you end up keeping after ALL bills are paid, including taxes.

So, run both scenarios. See which one produces the most money in your pocket.

 

This is the answer ^^^

 

You need a better accountant or you need to understand what they are saying to you. Paid off and depreciation are two separate things. As others have said, you can pay cash and STILL depreciate. I generally use Section 179 for all my equipment purchases. I want to reduce tax liability as much as possible with today's dollar and pay taxes later with depreciated dollars.

 

And if any accountant tells you to spend money to save on taxes, please send me $1,000.00 dollars and I’ll save you $250.00 on your taxes.
It’s for my “Business Management Course 1.0”
Totally tax deductible.

 

Are you actually using CPA’s or are you going to tax preparers?

i found tax preparers are clueless to how depreciation works and a bunch of non-business experienced cpas are just as clueless.

depreciation happens on purchased assets, not leased assets - exception is lease-purchase assets.

a truck it is generally 3 years, trailer it is 5.

Any loan on the truck doesn’t matter, you are essentially owning the asset.

So if you bought it outright, no matter what you deprecate it.

Lease-purchase is also deprecated because of the loophole on leased assets.

Find a good business accountant, someone who understands and can actually calculate depreciation without going to the computer - the formula is accounting 101 stuff.

 

Any contract for an asset that is structured like a purchase is treated like a purchase for tax purposes. That includes the typical lease-purchase agreement, but also the "1 dollar buyout" type lease where you make payments for x years and then end up with the asset.

It doesn't matter what it's called, the IRS looks at the structure of the contract. It it looks like a duck.........

 

Also learn the basics yourself, and double check your accountants work.
I do the books here, at the 6 month into year mark I take my work to the accountant to basically look over my work, and she does the year end.