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Making the next step in the PA biz... Let's hear your thoughts
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<blockquote data-quote="Eric Cagle" data-source="post: 73913" data-attributes="member: 277"><p>Re: Making the next step in the PA biz... Let's hear your thoughts</p><p></p><p>Congratulations on your success Evan! Lots of good advice in this thread, especially from Tim and Ivan. I will add my .02 worth. There are a couple of things that stand out to me. First, there is a pretty good tax advantage to your gear purchases if you are in a situation with a lot of exposed income and you have excess funds that you would just put in the bank and save (read pay lots of taxes on). I am going to add more to this in a minute.</p><p></p><p>I am going to vote for the VT4888 for your situation for several reasons. 1) you can scale up as you go and not have the pressure of not having enough rig for the gig due to the rental availability in your area. Buy a few boxes and get in, make some money and buy a few more boxes as you go or as you need a tax write off. 2) As you mentioned, there is a ROI potential for dry rentals. 3) It will handle the larger gigs you are doing. You have a nice trap rig for the smaller ones. On a perfect day both will be out making money. Start cloning yourself. 4) This is a very big one: If you decide for some reason that owning a big rig is not for you, there is a decent resale value if you got in at a good price. 5) You like it.</p><p></p><p>I am going to add that I do not see ANY advantage of being the only person in town with this or that rig. I have been in this business off and on for 30+ years and have never seen a job won or lost based ONLY on a specific brand rig. Many clients won't know or even care what brand you have but all will know if it sounded good or bad and they will remember the name of the person or company who did the job. I don't see any rider issues with a VT4888 either. </p><p></p><p>Now a little more about the tax thing. I am going to assume you do this first and foremost because you love it. I am also going to assume you really want a nice line array and would rather have that (at this time) than a nice sportscar or boat or whatever. From a straight business bottom line it still might be better to continue renting (please consider Tim's buisness plan either way) but if you factor in the tax write off, personal ownership enjoyment, and the fact that this cool toy will actually make you some money instead of just costing you some, things start to look a little bit different. Consider when you need the write off and also how much additional revenue this purchase is going to generate.</p><p></p><p> Situation 1: You made lots of money this year and have a bunch left. Buy the rig and write it all off. It just cost you 35% or so less than you payed for it because you would have payed that portion out in income tax. Take a check each time you rent it out from now on. </p><p></p><p>Situation 2: Finance it over several years. Depreciate it over the life of the loan. Hopefully it makes enough revenue to cover the note and with any luck some extra so you can take a check. If it does not you at least have a tax write off for the money you had to kick in. Depending on what tax bracket you are in for the year it actually cost you that percentage less for the rig. Do better the next year and at least get to say,"Boy that was fun giving my Vertec a workout" every time you take it out.</p><p></p><p>Situation 3: Do a combination of 1 and 2 depending upon when you need the write offs.</p><p></p><p>Situation 4: Decide that it will only go out a few times this year and continue to rent until you build up enough clients to justify buying it.</p><p></p><p>Anyway, good luck with whatever you decide. Keep us posted.</p><p>-Eric</p></blockquote><p></p>
[QUOTE="Eric Cagle, post: 73913, member: 277"] Re: Making the next step in the PA biz... Let's hear your thoughts Congratulations on your success Evan! Lots of good advice in this thread, especially from Tim and Ivan. I will add my .02 worth. There are a couple of things that stand out to me. First, there is a pretty good tax advantage to your gear purchases if you are in a situation with a lot of exposed income and you have excess funds that you would just put in the bank and save (read pay lots of taxes on). I am going to add more to this in a minute. I am going to vote for the VT4888 for your situation for several reasons. 1) you can scale up as you go and not have the pressure of not having enough rig for the gig due to the rental availability in your area. Buy a few boxes and get in, make some money and buy a few more boxes as you go or as you need a tax write off. 2) As you mentioned, there is a ROI potential for dry rentals. 3) It will handle the larger gigs you are doing. You have a nice trap rig for the smaller ones. On a perfect day both will be out making money. Start cloning yourself. 4) This is a very big one: If you decide for some reason that owning a big rig is not for you, there is a decent resale value if you got in at a good price. 5) You like it. I am going to add that I do not see ANY advantage of being the only person in town with this or that rig. I have been in this business off and on for 30+ years and have never seen a job won or lost based ONLY on a specific brand rig. Many clients won't know or even care what brand you have but all will know if it sounded good or bad and they will remember the name of the person or company who did the job. I don't see any rider issues with a VT4888 either. Now a little more about the tax thing. I am going to assume you do this first and foremost because you love it. I am also going to assume you really want a nice line array and would rather have that (at this time) than a nice sportscar or boat or whatever. From a straight business bottom line it still might be better to continue renting (please consider Tim's buisness plan either way) but if you factor in the tax write off, personal ownership enjoyment, and the fact that this cool toy will actually make you some money instead of just costing you some, things start to look a little bit different. Consider when you need the write off and also how much additional revenue this purchase is going to generate. Situation 1: You made lots of money this year and have a bunch left. Buy the rig and write it all off. It just cost you 35% or so less than you payed for it because you would have payed that portion out in income tax. Take a check each time you rent it out from now on. Situation 2: Finance it over several years. Depreciate it over the life of the loan. Hopefully it makes enough revenue to cover the note and with any luck some extra so you can take a check. If it does not you at least have a tax write off for the money you had to kick in. Depending on what tax bracket you are in for the year it actually cost you that percentage less for the rig. Do better the next year and at least get to say,"Boy that was fun giving my Vertec a workout" every time you take it out. Situation 3: Do a combination of 1 and 2 depending upon when you need the write offs. Situation 4: Decide that it will only go out a few times this year and continue to rent until you build up enough clients to justify buying it. Anyway, good luck with whatever you decide. Keep us posted. -Eric [/QUOTE]
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