Buying

If you're looking to buy (we'll assume through a loan), you're going to need to come up with a down payment and probably pledge other assets as collateral. Most loans also require two expenditures within the first payment period: the down payment and your first monthly loan payment. (If you're buying with cash, you should run the idea through your tax consultant, as he or she may advise you that there are better, more tax-friendly ways to purchase equipment.)

The good news is that loans allow you to claim a tax deduction for a portion of the loan payment (as interest) and for depreciation (tied to IRS depreciation schedules). It's always advisable to talk to your tax specialist before you make any move, as they will be aware of the current Internal Revenue Service (IRS) regulations.

Any equipment you buy is required to appear as an asset with a corresponding liability on your balance sheet. If you choose to buy, you'll be responsible for many things: the entire life of the equipment; tracking the asset through its entire life cycle; managing all maintenance costs, interest, taxes and insurance; and the disposal or selling of the equipment when it's outdated or no longer of any use to you.

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