Opening a building industry-related firm means acquiring numerous pieces of equipment used for construction. Some of these heavy equipment essentials each company needs to own, but a construction company can rent infrequently used equipment. How do you determine which equipment type a specific machine falls under?
Every construction firm needs to own a pickup truck or full-size SUV so it can transport personnel and everyday equipment. The tools of the trade differ depending on the construction specialty, so a plumber owns different hand tools than a carpenter. Some carryovers may exist but differences abound. When it comes to heavy machinery tools, make a list of all the equipment that a job could possibly require.
You don’t have to purchase all of this heavy equipment. Only buy the heavy equipment used in the majority of your jobs. If you’re opening a new firm, consider the type of jobs you will most frequently bid on and the equipment required. Those opening on a shoestring budget may turn to construction equipment rental for every piece of heavy equipment needed for their first few jobs.
Established Construction Firms Choose What to Rent
The United States has a market share of about 10 percent in the worldwide construction market; that’s the second largest share of any country. And the industry is still growing. If you’re one of the contractors contributing to that growth, you might be thinking about what equipment you need, and whether you should rent equipment or buy it.
Sales of light construction equipment have increased by 11.2 percent in the United States, but even if you decide to buy your light equipment, it might be more cost effective to rent heavy equipment. Every contractor is different, and you have to weigh the pros and cons for your business. Here are five circumstances where it would be more cost effective for you to rent equipment:
1. You Don’t Use The Equipment That Often
If you use a piece of equipment less than 60 to 70 percent of the time, it is probably more cost effective to rent it. For example, let’s say you specialize in roofing, an industry which is supposed to grow by $5.3 billion over the next several years. You might sometimes need a boom lift in order to do a job, but you certainly don’t need it all the time. So it would be more cost effective to look into boom lift rentals.
2. The Equipment Might Need Expensive Repairs
If you don’t want to have to pay for the cost of repairs on heavy equipment over its lifetime, it is better to rent equipment when you need it. Earth moving equipment can be very costly to repair, adding to the cost of your purchase over time. Renting equipment avoids this problem.
3. The Equipment Is Not Very Versatile
If you are a contractor that does many different types of work, and a piece of equipment cannot be used for many different jobs, it is better to rent it.
4. Equipment Is Costly To Transport
If you are a contractor based in Virginia, for example, who gets a job in say, Delaware, it might be very costly to transport your equipment to the next location that you are doing a job. If you decide to rent your equipment, once you get the job you can look for companies that provide Delaware equipment rental, making the job easier and less costly for you.
5. You Can Save Money On Your Taxes
You can deduct the cost of construction equipment rental on your annual tax return as a business expense. You can also avoid property taxes and licensing fees by renting your equipment instead of buying it.
Only you can decide whether renting or buying is the best choice. Always be sure to do your research to make the best decision for your contracting business.