$1,000,000 New Equipment Deduction for Small Businesses : Tax Code Section 179
There is a federal tax deduction code (tax code section 179) that allows small businesses to fully deduct up to $1,000,000 worth of new equipment and equipment upgrades. Some of the types of equipment that qualify for the deduction include: computers, software, machines, some vehicles, office furniture, office equipment, building renovations (HVAC, new roof), business property, and more can be fully deducted; 100%.
In order to qualify for the deduction, the equipment must be purchased and put into use during the 2018 calendar year (Jan 1-Dec 31, 2018). It can apply to new, used, financed, or leased equipment so long as it’s new to you.
The tax code section 179 deduction amounts and rules can change every year. For 2018, the opportunities are exceptionally good, so make sure to take advantage of them.
To learn more about tax code section 179, fill out our “contact us” form on this page.
Up to $1,000,000 Deduction | Tax Code Section 179
With tax code section 179 you can deduct up to $1,000,000 worth of equipment, so long as you spend $2,500,000 or less on equipment throughout the year. This is designed to be a unique benefit to small businesses. Once you spend more than $2.5 MIL, you can deduct one less dollar for every extra dollar spent over $2.5 MIL. For example, if you spent $250,000 on equipment over $2.5 MIL (totaling $2,750,000 in equipment expenses for 2018) you are able to deduct $250,000 less, for a total deduction of $750,000. Therefore, if you spend $3.5 million dollars, you are unable to deduct equipment purchases using section 179.
That being said, most small businesses won’t exceed $2.5 million worth of new equipment purchases in a calendar year.
However, for those businesses who spend over max amount of $2.5 million, can take advantage of something called bonus depreciation. This will allow them to still receive some very nice tax deductions for business equipment expenses (reach out to us with more questions or visit www.section179.org to learn more).
Make sure before you purchase any equipment expecting to use this deduction, make sure to talk with your accountant or tax professional who can help walk through how this deduction applies to your business. This will help avoid any unfortunate misconceptions.
Here is an in-depth video that covers tax code section 179:
Deadline: Before Dec. 31st
The deadline for equipment purchases is Dec. 31st. In order for equipment purchases to qualify for Section 179 tax deduction, it must be purchased AND put in use by Dec. 31st, 2018. So, act now! This tax code usually changes every year. Every aspect of it can change year to year. For example, the amounts deductible, the percent of purchases that are deductible, the types of items that are deductible, etc., are all subject to change every year. For 2018, the deductions available are at a peak. Therefore, you need to make sure that you and your business take advantage of this great opportunity to upgrade your business.
When Should I Upgrade What?
It’s important that you keep all of your software and hardware up to date. This ensures that you’re running as efficiently as possible. However, it’s hard to anticipate and plan for when you’ll need to do upgrades. Every piece of equipment is going to last different lengths of time. You can never fully predict when one will fail. According to our industry experts, here is a rough schedule of how frequently you need to be updating your different forms of hardware and software to maximize their usable life:
Consumer grade computers have a lifespan of about 2-3 years when used for business. Commercial grade computers have a lifespan of about 3-5 years. You’ll begin to notice it’s time to upgrade your computers when performance starts to taper off. This could include functions slowing down, issues with updating or installing the latest operating system, or trouble/issues with running needed software apps. The actual lifespan of your specific computer will vary by make, model, usage, and the individual machine. Having up to date computers will greatly increase efficiency and reduce frustration.
Servers have a useful life of around 5 years, although that can vary greatly. Most experts agree that essential servers should be replaced or shifted to less essential functions at least every 5 years. However, there are ways to increase the amount of time a server can be relied upon to handle essential functions. For example, two of the most common ways a server will begin to break down is when the hard drives and power supplies begin to fail. Therefore, if you are to replace these about halfway through the warranty on your server you should be able to extend its useful life. As with any piece of technology, sometimes they just fail and there’s nothing you can do about it. But, with proper care and maintenance, you should be able to get at least 5 good years out of a server.
Every piece of software is going to be different. However, they all have one thing in common: updates. It’s vital to your organizations’ productivity and security to always update your software whenever possible. Software updates come with crucial new information or features that can help protect you from cyber attacks and keep you running smooth. Delaying software upgrades and updates leave you vulnerable to cyber attacks.
Executech: Retailer of Computer Products
Executech is a retailer of computer equipment, software, servers, and many other things. We work with suppliers and vendors in every major computer related field. We will be able to work with you and these connections to find the best price, for the equipment that you need. Oh, and we will help set everything up with great speed and accuracy. With a free consultation, our Executech technicians can help you determine what equipment upgrades you can benefit from and help with the ordering, installation, and configuration of all of the new equipment. Executech will help you make the most of the deductions of tax code section 179.
Benefits of Using a Reseller
When looking to upgrade your computer equipment throughout your office you should consider using a software and hardware reseller like Executech. Here are several key reasons why they can help you save money, time, and get the job done right:
The biggest benefit of using a reseller of equipment is that they have industry connections. They frequently work with other vendors and manufacturers and can get you the best price possible. Often, vendors, manufacturers, and suppliers will provide cheaper product pricing to customers who go through a reseller because of the amount of business that reseller brings the supplier. Often these prices will even beat the price that you would get by going directly to the manufacturer or retailer themselves.
Knowledge and Experience
Individuals at resellers are experts. The technicians at Executech are highly knowledgeable about current products, trends, and industry specific standards that allow them to pick the best fit of equipment for you and your business. There’s no need to spend hours of time researching different product options on your own because these knowledgeable techs will be able to do all of that for you. They will be able to assess the needs, budgets, and restrictions of your company and find the best combination of hardware and software to match.
Installing new software and hardware can quickly become very complicated. Many resellers, like Executech, can work in installation discounts into your price of the equipment. Sometimes they’ll even install your equipment for no extra charge. That service alone can quickly add up to thousands of dollars’ worth of savings by using a reseller.
Using a reseller is the smartest way to upgrade your office equipment. As a reseller, Executech will help you get the upgrades you need for a price you can get behind.