I haven’t written to you in a little while, what with the end of year crunch and the holidays and all. This is probably the last time I’ll be writing you this year, but will kept sending you hopefully interesting and informative articles regularly next year.
So let me start off by wishing you all a Happy Holidays and a Healthy and Prosperous New Year.
That said, who doesn’t like to save money? Yeah, probably all of us do. And probably all of us are spending a lot at the end of the year on presents, trips, parties, and so on.
But did you know that you may be able to save money by SPENDING money?
It is something called the Section 179 Deduction.
Basically, it allows you to buy equipment that would normally have to be depreciated to recoup the costs, but instead, you can expense the entire purchase right away.
Normally, if you buy office equipment such as computers, printers, a copier, a new phone system, business vehicles, etc., you have to figure out the life expectancy of that equipment as defined by the IRS, and then depreciate it using one of several different methods that the IRS approves. That means that those five new computers you want to buy MAY have to be depreciated over several years, which means that you get only a FRACTION of the amount spent on the computers each year that you can write off on your taxes.
However, with a Section 179 expense allowance, you can write off the FULL amount of purchases in the year purchased without having to depreciate it over multiple years. There is, however, a limit.
So if you still haven’t spent the full limit and you’re looking at buying some equipment, doing it NOW means that you can probably write off the entire amount on this year’s taxes.
Consider it a holiday present from the government.
Of course, ask your tax advisor for specifics and how it may affect your business. I am NOT a tax professional (I’m a computer guy).
