There are now less than two months left in the year, and just a few more weeks to do things that can impact your 2020 business taxes. This is often a busy time for accountants as they confer with clients on last-minute tax-deductible purchases.
This year, the Section 179 equipment and software deduction limit was raised to $1,040,000. There is also a 100% bonus depreciation that allows businesses to deduct all the depreciation of an item purchased in 2020 at once, instead of having to spread it out over several years.
Technology is an excellent option for purchases made before December 31st that can be used for tax write-offs. Upgrading the IT infrastructure at your Fresno business can have a direct impact on productivity, cybersecurity, and your bottom line.
Coordinating with a technology consultant now can help you make the most strategic tech upgrades to your business that will give you the best return on your investment.
Planning for Year-End IT Purchases
Before you do a year-end technology assessment for potential tax-deductible purchases, it’s important to know what types of technology is a qualified Section 179 property deduction.
Section 179 is part of Form 4562 for depreciation and amortization deductions. It allows you to expense certain types of property that is acquired by purchase for “use in the active conduct of your trade or business.”
Here are the types of technology that qualify and how an upgrade could benefit your business.
Computers
You can deduct the cost of both new and used computers. If used, the equipment must be “new to you.”
Some potential considerations when looking for year-end computer purchases include:
Replacing Older Computers:
If you have staff working on computers that are older than 4-years old, you could be paying more in productivity and downtime costs than the price of a new computer. A study released by Microsoft estimates the cost of keeping older business computers in operation too long at $2,726 per year.
Replacing older computers before the end of the year, can help you head into 2021 with a more productive team.
Remote Staff:
If you have remote staff that are using their own personal PCs when working from home, you might want to issue them company computers. This can resolve any security and performance problems that can occur when you don’t have control over the types of devices being used for work.
“Off the Shelf” Software
Software is also deductible, as long as it’s “off the shelf,” meaning that it’s not custom built only for your company. If you purchase software to host either through an on-premises server or through a private cloud service, then this can also be deducted.
Automation:
Look for opportunities where software can help you automate manual processes and more easily move data from one workflow to another. Process automation can result in a cost savings of between 40-75%.
Office Equipment
Other equipment around your office can also be deducted. This would be things like printers, routers and network equipment, IoT devices, and any machines you use in your business.
Network:
Consider upgrading your router to Wi-Fi 6 for more speed and security or switching to a mesh network setup to improve wireless network range and reliability.
Mobile Devices
Cellular telephones and “similar telecommunications equipment” qualify for tax deductions under Section 179. Which means you could upgrade both smartphones and tablets for your organization.
Tablets:
Tablets are growing in popularity as a work device due to their expanded features, portability, and ease of use. Look at any areas of your organization where use of tablets could improve a business process or replace a manual form.
Security Systems
Security systems is another type of technology that you can deduct from your business taxes. Today’s cloud camera systems have made it easier than ever for a busines to set up an affordable surveillance system on their property.
Look for cloud systems that have wireless cameras, two-way communication through video cam, and allow you to view all your feeds through a cloud app.
Server, Firewall, Other Equipment
Other technology-related real property that you can deduct includes things like a physical firewall for your network, printers/scanners, electronic sensors, etc.
Here are some other potential technology items that you may want to consider for year-end tax deductions:
- Server
- Network Attached Storage (NAS)
- Firewall
- Wireless printers
- VoIP-enabled desk phones
- Headsets and other equipment accessories
- Smart alarm systems
Schedule a Year-End Technology Assessment with Unity IT Today!
There is still plenty of time to have us do a year-end IT assessment at your Fresno area business. We’ll go through all your technology and let you know what the most beneficial and productive upgrades would be.
Contact us today to schedule a technology consultation at 559-297-1007 or reach out online.