No one looks forward to tax season – but for small and medium-sized business owners, Section 179 aims to make the process a little less painful. Have you held off on upgrading equipment – for a year, two years, even a decade – because the upfront cost was too steep?
Traditionally, a business owner could write off the cost of equipment a little bit at a time through depreciation. For example, if you spent $30,000 on a machine, you may have written off $10,000 a year for three years. But, what if we told you that you have the ability to make your upgrades right now and deduct the full amount of your purchases this tax season?
It’s true. Section 179 allows you to deduct the full price of any qualifying equipment or software purchased, financed or leased during the year, including:
- Workstations, laptops, tablets, smartphones
- Servers and printers, routers, network switches and network security appliances
- Off-the-shelf software (productive, anti-virus, administrative, etc.)
- Vehicles designed for commercial use
- Nonresidential property improvements
All you need to do is use form 4562 to claim your deduction. For 2018, the full deduction can be claimed until you’ve reached the allotted $2.5 million in equipment and software purchases. Past that point, the deduction decreases on a dollar for dollar basis until it disappears at $3.5 million. Even businesses with a net loss may be qualified to deduct a portion of the cost of new equipment and carry forward the loss.
Is it time to upgrade your equipment? Generally, you’ll notice a performance decline in the first one to two years, with major errors occurring in years three and four. Here’s a good replacement timeline:
- Computers – Every five to seven years
- Other tech, including printers and switches – Every three to five years
- Company vehicles – Every six to 10 years
Swapping out dated technology translates to big benefits – less downtime, less time waiting for new equipment, a better customer experience and boosted revenue. Keep pace with your competitors or push past them by taking advantage of Section 179. If you have questions about your eligibility, consult your accountant and visit section179.com for additional information.
You have the opportunity to leverage new equipment right now instead of waiting and potentially slowing down growth and innovation. Ready to boost your business? Contact us today to determine which tech upgrades will make the biggest impact on your operations.