When you have a major construction job on the go one of the first questions you will need to consider is the cost of machinery.
Is it cheaper, better and more efficient for you to hire the relevant machinery as opposed to buying it? The answer depends on a number of things.
How big is the task at hand? How skilled are you in carrying out this particular task? How big is your budget for this particular task?
These three questions will go a long way to helping you decide to hire or buy. Remember that the cost of equipment whether you hire or buy can be a financial drain on your resources.
If you intend to use the equipment for a relatively long period of time and particularly if there is the possibility that you can use the equipment on other jobs later on, then purchasing as opposed to hiring might well be the better option.
But if you buy the equipment and it becomes out of date or if new models offer far more benefits, then you may be stuck with equipment which doesn’t really do the best job possible.
Taxation will almost certainly be relevant whichever route you take. Here you need expert advice from an accountant who is experienced in the purchase and hire of equipment.
Depreciation is an important factor and the more you understand how it works and its benefits for your specific taxation situation, the more you will avoid making a decision in the dark.
Get all the facts and make sure that whichever choice you make your bottom line will be well served.
In some cases if you hire a specific contractor to do a certain task, part of their hire fee will include the equipment. This can take the decision about hiring or buying off the table.
You need an expert to carry out a certain task and when you hire an expert he or she comes with the relevant equipment. It’s all part of the same deal. In this case hiring is certainly the way to go.
In many cases the choice is made for you. Let’s assume that you do not have the financial resources to purchase an expensive piece of equipment. In such a case you have little choice but to hire.
Another case might involve a job which is only going to last a short period of time after which you do not require the equipment anymore.
Again in this case hiring the equipment is the sensible and cost-effective way to go. Some simple planning at the beginning of your task will quickly reveal the benefits of hiring over buying.
The nature of the task will almost always determine with the hiring or buying is the better option.
For example a farmer who owns the property and who intends to fund the land for years to come and hopefully even involve his or her family working the same land is in a much different position than a person who wishes to erect for example a fence.
Constructing a fence can be described as a short term project. A farmer working a property for many years is facing a long-term project.
So bearing in mind all these things, making a choice as to hire or buy equipment is decided by these points. How big is the job? How big is your budget?
And what are the tax benefits or breaks available should you hire or buy?
By giving clear and detailed answers to these questions you will have the choice made for you.