Equipment Appraisal Blog | Understanding Machinery Appraisals

How a Shop Equipment Appraisal Protects Your Investment

Posted by Equipment Appraisal Services on Tue, Aug 16, 2016 @ 09:30 PM

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When you run a business, there's always some risk to your investment. Being a wise business owner means you know how to recognize those concerns and how much of a risk they pose to your company. Though many business owners discount the value of shop equipment appraisal, it can be vital to your business' success or failure. Here are details on how that happens:

How Shop Equipment Appraisal Protects Your Investment 

  • Providing documentation of value: If you need to document the value of your machinery, whether for financial documents, a loan to expand your operations or to disprove a high property tax assessment, a machinery valuation prepared by a certified equipment appraiser serves as legal proof of the value of your workshop equipment. Because a certified appraiser uses recognized, accredited methodology to calculate the equipment values, it will stand up to strong scrutiny from virtually any source, making it much easier to bring negotiations around to the actual value of your business and equipment, saving you time, effort and money in the process.
  • Ensuring appropriate insurance coverage: When your business suffers a loss, whether it's from a fire, a natural disaster or a theft, your insurance company will require you to provide proof of value. The problem is that many businesses aren't sure of the value of their machinery at the time of a loss, due to changes in market conditions, depreciation and similar issues that are often dealt with in equipment appraisals. An equipment appraisal also ensures that you're carrying the appropriate level of insurance on your workshop equipment. If you have an appraisal from a certified equipment valuation specialist, it provides legal proof of value, minimizing the chance that you'll have to take your insurance company to court to collect the proper valuation on a loss.
  • Ensuring correct depreciation: Many bookkeepers and tax accountants only depreciate your shop equipment and other depreciable business assets based on the federal tax code's schedule of depreciation. But what if your equipment is being heavily used and is no longer worth the amount shown on the depreciation schedule? On the other side of the coin, if you've spent good money investing in and maintaining quality shop equipment, it may be worth significantly more than the depreciated value, which is very important to the asset side of your balance sheet when you need to get a load for expansion, to prove value when selling equipment or for other business transactions.
  • Helps protect against unexpected early machine failures: Part of the equipment appraisal process is estimating the expected lifespan of machinery. Though most appraisers can do a fair job of estimating this figure, equipment valuation specialists who work primarily on industrial equipment are far better at this than most. Because they deal with machinery on a daily basis, they can help you determine how much longer the equipment you have is estimated to last, making it much easier for you to start making plans to replace it when the time comes. Though this figure is not set in stone, it is a good gauge to help you plan for your business future expenses.

By having a shop equipment appraisal performed on your workshop machinery, you can ensure that your investment in your business is protected, no matter the exact risk at hand.

Tags: Equipment Appraisal, shop equipment appraisal