Leverage Section 179 to Upgrade Your Equipment & Software
As we come to the end of a year that has been challenging in more ways than one, your business’ requirement and usage of your business’ infrastructure, devices and software may have changed drastically. Instead of trying to patch together new processes to overcome the shortcomings of your existing systems, it might be time to consider buying or leasing new equipment or software.
Luckily, if you are a small or medium business, you may be able to leverage the section 179 tax break to help improve your technology infrastructure. This allows you the opportunity to save money on taxes while benefiting from the improved productivity and profitability an upgraded technology infrastructure could provide.
What to know about Section 179
Taxes are confusing, stressful, and usually dreaded. Often so is the thought of upgrading software or technology. Don’t let this frustration keep you from utilizing this incentive to improve your business. Here is what you should know:
- Section 179 can be used for more than you might think.
If you use something for your business, chances are it is qualified. Wherever general equipment depreciates, there is a good chance you can write it off under section 179. This would include devices like desktops, laptops, phones, and other technological equipment you utilize.
- Utilizing Section 179 is strategic. You might be wary of spending money after a year like 2020, but utilizing this incentive can be a smart business move. Writing off the full cost of upgrades for equipment and software helps you focus spending on other areas of your business. Additionally, it is always less expensive and interruptive for your business to plan device or software upgrades then waiting for something to go offline or break.
- Section 179 also permits an Equipment Lease or Equipment Finance Agreement. If you aren’t ready to put up the capital to fully upgrade or buy new devices or software, you can look into financing or leasing. Section 179 allows you to write off the entire amount you will be paying even if you haven’t spent it by December 31st, 2020. Pursuing the option of a structured equipment lease or financing allows you to write off the entire amount of upgrade for only a fraction of the cost.
- December 31st is a firm deadline. You can only use Section 179 on expenses that occurred during 2020. This means you need to have the software or equipment in use by midnight on December 31st, 2020 to take advantage of the deduction. If you don’t use it, you lose it.
- The Section 179 is not an automatic deduction. You must elect to take the deduction by filling out Part 1 of IRS form 4562. You can work with your accountant to make sure you are correctly filing to take advantage of this deduction.
Here at Zephyr, we might not be able to help you file your taxes, but we can help make the planning and implantation of device or software upgrades seamless. We can even introduce you to leasing companies we have worked with in the past. You can leverage our experience and expertise to find the best possible solutions to keep your growing business thriving and able to endure whatever 2021 has instore for us. You can book a call with us here.
Please note that this blog post is intended for general information and not intended to be professional tax advice. To learn more about the Section 179 tax deduction, please refer to irs.gov and section179.org.