1. Manufacturer Reputation
Buying dental equipment from a reputable manufacturer is an important thing to consider before you make the purchase. The amount of time a manufacturer has been in business is just as important as its reputation. The longer a manufacturer has been in business, the more they are prone to produce a quality product. Many newcomers to the dental equipment space may not have enough experience to really know what a dental office needs. It is best to stick with a manufacturer that is tried and true.
2. Need vs. Want
It can be very tempting to want the latest and greatest high-tech equipment available. Oftentimes, dentists choose flashy dental equipment that they simply do not need. New, cutting edge equipment can also offer the perception of a successful dental practice, which can be impressive to clients. However, no matter what dental equipment you choose, it is best to weigh out the options of need vs want. To do this, you will want to factor in the return on investment (ROI) before determining if the dental equipment is worth the investment. Some dental equipment could make your practice more efficient if used enough. Thus, only regularly used dental equipment is worth the investment. If the dental equipment you want does not generate enough use, you may want to skip it altogether.
3. Lifespan of the Equipment
The lifespan is paramount when deciding to purchase new equipment. Even with consistent proper maintenance, dental equipment will not last forever. This is very important when choosing equipment with a hefty price tag. Not only does this factor into the ROI, but lenders will also use this if you choose to finance the equipment. Essentially, the lifespan should be the length of the financing term or loaner. Otherwise, you will be upside down in equity, and this will become a difficult obstacle when you want to upgrade the dental equipment again. Lastly, the potential ROI should also factor in the lifespan. If the dental equipment assists with a procedure that becomes outdated, then the equipment will be obsolete.
4. Tax Deductions
There are plenty of tax advantages when you purchase new dental equipment. The section 179 deduction can help in a few ways. This tax code was created so business owners have the ability to continue to invest in their business. Qualifying the full purchase price of new dental equipment can be deducted from your gross income. The United State government created this incentive. New dental equipment also qualifies for a 50% bonus depreciation.
Here is an example of how the section 179 deduction could work on a $650,000 piece of dental equipment:
- Dental equipment cost: $650,000
- First year write off: $500,000 (maximum amount allowed)
- 50% bonus year depreciation: $75,000
- Regular first year depreciation: $20,000
- First year deduction = $500,000 + $75,000 + $20,000
- Total deduction for the first year = $590,000
5. Financing Options
There are several financing options to consider when purchasing dental equipment. The most popular are traditional banks, alternative lenders, and the manufacturer itself. A traditional bank generally offers the best terms but you will need to be well qualified, and it may take awhile for approval. Alternative lenders can offer funding in 24-hours however, the fees and interest rates are usually really high. Most manufacturers offer financing, however, it is funded by a third-party lender and may not offer the best terms or rates. It is best to search and compare loans before purchasing dental equipment to ensure you get the best rates available.