How to Use Section 179 To Invest In Your Business’ Technology
As we come to the end of a year it is time to strategize for the year to come. As your business evolves, make sure your technology infrastructure is still able to efficiently support you in reaching your goals. After a year as transformative as 2020, it might be time to consider buying, or leasing new equipment or software. 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.
Have A Vision For Your Technology Infrastructure
Don’t be seduced by the cost savings of the tax break, and just start upgrading devices or software because you can. Here at SwiftPuppy, we work with our clients to ensure that they have a vision for what their perfect IT infrastructure would be. Every purchase you make should be contributing toward the realization of that vision. We don’t want you wasting money on lateral purchases that won’t bring you closer to your goal.
If you aren’t sure what your perfect IT infrastructure should look like, reach out to us. We can help identify any infrastructure that could use improvement, identify if anything is missing, and advise you on what you could do to better situate your business for success. You can book a call with us here.
How to Use Section 179
1. Section 179 is more versatile than you may have thought.
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.
2. Section 179 permits Equipment Lease or Equipment Finance Agreements.
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.
3. In order to claim a deduction, your purchase must be IN USE on December 31st, 2020.
You can only use Section 179 on expenses that occurred during the 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.
4. 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 SwiftPuppy, we might not help you file your taxes, but we can help make the planning and implantation of device or software upgrades seamless. Book a call and let us get you set up for 2021 and beyond.
* 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.