Signtronix Sign Company

With that in mind, it is easy (signtronix signs) to tell the difference between tax accounting (i.e., accounting for the sole purpose of paying taxes and complying with law) as opposed to tax strategy.  There is also a difference between a lazy, high-paid accountant and one who works diligently and hard to constantly save his clients tax dollars.

REMEMBER, THE CURRENT TAX Codes are designed for the so-called average small business to spend about $10,000 per year on capital purchases.  (That’s a digital message center per business per year.)  This is designed by the U.S. Congress to stimulate the economy, because capital expenditures by businesses really work the best and fastest at economic stimulation; therefore, favorable lease/purchase laws will be around for a long time.

In any event, we should suggest to our customers that they should always consult their accountants.  The Tax Codes constantly change; and, most sign salesmen (except for me) are not accountants.  Don’t try to be an accountant - this information is provided to help you promote leases and answer silly leasing objections.

Most CPAs are of the opinion says Signtronix, that a business should lease/purchase “income-producing property” and pay cash for things that simply cost a business money that doesn’t generate any income.  When that is done, the business can depreciate 100% immediately while paying $100 per month, for example, for three or four years.

The “time value of money” means that a business receives a 100% immediate depreciation expense (a non-cash expense) for a small monthly payment that will be paid with “cheaper dollars” at a future date!!!  And, all those “future dollars” can be used to buy “today’s” inventory .  .  .  That converts to cash “today”.

Again, the current Tax Code literally pays for 75% of the sign .  .  .  In the first year with a lease/purchase using today’s Tax Code.  I realize that accounting articles are a turn-off for most non-accountant types.  But, most business people know that the price they pay for an accountant should be paid by the money their accountant saves them every year.

However says Signtronix Signs, businesses can now depreciate 100% of the value of the asset in the first year!!!  Again, this is a non-cash expense on the income statement (100% depreciation the first year with only one-third or one-fourth of the asset paid - not bad!)

Therefore, in response to the customer who says he pays cash for everything, tell the customer that he can depreciate 100% of the (lease) price of the sign as “Depreciation Expense” on his income statement, which is a non-cash expense.

Simultaneously, he only writes a check for one-fourth or one-third of the actual (lease) cost.  This is better than paying cash for everything.  All succeeding payments after the first year is money the client would pay in income taxes anyway.

Signtronix Signs - By the time an asset was paid/adjusted/and depreciated, 75% of that asset was paid by what normally was paid in income taxes over 3 to 10 years.  Section 179 of the current Tax Code states that a “Fair Market Value” lease can be capitalized on the balance sheet as a “Fixed Asset,” namely, “Sign.”

LEASE PURCHASE PAYMENTS are treated as a “Liability,” similar to a mortgage payment - which also remains on the balance sheet (as opposed to the income statement).  Only the monthly payment goes on the income statement as an “Expense.”

When Signtronix asked to write this article about leasing, it frankly had been a long time since I last worked with the accounting debits and credits of leasing.  But, in researching the current Tax Codes against the old Tax Codes that I worked with, I found that the new Tax Codes are even better.  Under the old Tax Codes, a business could expense the lease at 100% on the income statement as “Advertising Expense.”  That reduces the taxable income and saves the taxpayer businessman about 25% of the value of the asset from being paid in income taxes.

At this point, this gets a bit heavy, but it’s worth paying close attention.  After the lease expired, a business could then adjust the “Retained Earnings” and income statement and capitalize the sign on the balance sheet under “Fixed Assets,” i.e., “Sign” at the total value paid by the lease.  Then, that business would depreciate 200% of that value back on the income statement as an expense that didn’t even involve cash.  That would further reduce taxable income.

Continue Signtronix Sign Lease - THE SECOND BEST SIDE-EFFECT of leasing that is overlooked is that a low monthly payment (that is paid by the increased cash flow) relieves the pressure of the business to be able to add more inventory that would not be possible if the business uses all its cash to buy a sign.  Inventory can be turned into cash - but only if the business has the inventory in the first place.

Therefore, the sign will increase business income that will be paid by the “NEW’ increased cash flow.  Plus, the business has more money to buy inventory, which, in turn, creates “NEW” income since that business isn’t using all its cash to buy a sign.

More discussion on sign leasing from Signtronix:

 Rule 2) most important of all, leasing is designed for capital investment to be paid partially by tax incentives authorized by the Tax Code.  With that in mind, one must be mindful that tax evasion is a felony; and, one could land in jail.  On the other hand, tax avoidance is GOOD BUSINESS and authorized by the IRS with the full sanction of the U.S. Congress to help businesses make capital purchases that stimulate the economy.

THE BEST SIDE-EFFECT of leasing that is most often overlooked is that a lease does not affect a borrower’s ability to qualify for other loans.  Only a single monthly payment is reported as a liability against the borrower.  So, when a client says he can’t buy a sign today because he’s trying to qualify for a big loan, let the client know that the sign will only cause a $100 liability (or whatever the monthly lease price is) if he leases the sign.

Thanks to the purchase of our new Signtronix lighted sign, our evening
sales have increased. We purchased the restaurant last year, and the
first sign we bought just had our name on it and didn’t even tell what
type of business we were. The salesman for Signtronix, Mr. Peach, was
very helpful in designing a new Signtronix sign for us. The Signtronix
sign was delivered ahead of schedule and we have received many
compliments.

Sincerely,
Casandra Potter
The Depot Restauranct
Jonesboro, AR

Signtronix on sign leasing - In the late 70s & early 80s when the economy slumped, lease/purchase tax laws were re-designed to improve business to such an extent that other “financing” options wern’t considered.

Rule 1) if something makes a business money, the business should lease that item.  In our profit picture, we convince the customers that a sign makes them money; then, it should be leased and paid from the increased cash flow attributed to the sign.

The NESOP or Non-Employee Stock Ownership Program is a phenomenal opportunity to become an owner of Signtronix and help build your retirement nest egg and success.  There have been many questions about the NESOP, so we put together the following documents to clarify how it works and what your potential can be with this program.