eye on equipment

The New Worksheet

Karlen McLean, ABOC, NCLC

You may be considering in-office edging but feel too time-crunched to get your thoughts, plans, and goals in line. If so, here's a quick and easy way to help you crunch the numbers as a starting point.

PROFIT ANALYSIS METHOD

Generally, a practice can save 30 percent on its monthly lab bill by edging in-office. To determine if that's true in your case, or if it can be even better, some things to consider for a realistic idea of whether an in-office lab can be profitable for you are:

1 Determine the average cost of having your edging done by an outside lab. This can be factored on a per-job or average per-job basis.
2 Define the complete cost of an edger.
3 Factor in the cost of an employee if you plan on hiring personnel to run the lab, or if you will increase an existing employee's salary for lab-related duties.
4 Look at possible additional expenses, such as construction, electricity, and insurance costs. Some of these expenses may be one-time-only, while others could be ongoing.
5 Be realistic: By edging in-office, you—not an outside lab—will be incurring redo and remake costs. Also, factor in an estimated cost for breakage.
6 Weigh payment options: Financing costs (interest + principle) or cash payment and how much the monthly payment will be.
7 How does the new equipment affect taxes (deduction and interest versus additional property taxes)?

If you do decide to hire a new employee and are concerned about the cost, consider that the Hiring Incentives to Restore Employment (HIRE) Act of 2010 has extended Section 179 deductions for 2008/2009 into 2010.

This means businesses can now write off up to $250,000 of qualified property—including business equipment—put into service during the 2010 tax year. EB