A short YouTube video by Jayson Lowe answering whether purchasing equipment is an expense. Lowe states that equipment bought to generate revenue is an expense to the business, explains how the loan to finance it appears as a liability on the business balance sheet while the lender records it as an asset, and connects this to the "infinite banking" concept where business owners control financing and become their own bankers.
Chapters
Is a purchase of equipment considered an expense? Is a purchase of equipment considered an expense? The answer is yes. When you buy a piece of equipment to generate revenue or to produce taxable income inside of your corporation, then that equipment is an expense to the business. Now, the key is, if you look at it from this vantage point, think like a business owner. When you look at the balance sheet of your company and you look inside of the liability column, if you borrowed the money to buy that piece of equipment, that loan is going to show up as a liability on your business's balance sheet. Whereas if you sat down with the lender who financed the equipment for you and you looked at their balance sheet, that lending activity is going to show up as an asset, not a liability. So when the business owners that we work with embrace the infinite banking concept, they not only have the equipment that they have purchased to produce more revenue, but they now have also taken control of the financing of that equipment. So they become the banker as it relates to the business's needs. And a banker understands that loans are an invested asset, they're not a liability. And so this is a just a paradigm shift in thinking for the business owner where once they catch it and they understand it, they can't get enough of it.
