This year has been a tough one for all industries, but the American small business owner has been particularly hard hit.
Small- and medium-sized businesses (SMBs) are still struggling to survive the recent economic shakeup surrounding changes in markets and consumer behaviors following the COVID-19 pandemic.
Many have been forced to dip into vital reserves to continue to operate, and 40% have made cuts in non-employee spending — things like office equipment, maintaining the workplace, and even technologies.
Unfortunately, cutting vital equipment out of the budget takes a toll on productivity, as shown when Overall Equipment Effectiveness (OEE) numbers are calculated for a particular enterprise. A lack of equipment or poorly maintained or outdated equipment can reduce employee effectiveness and further hamper a business’ ability to recover.
Fortunately, there is still time for your business to leverage the advantage of Section 179 deductions to not only maximize tax savings but get the state-of-the-art office equipment your staff needs to keep business running smoothly.
Using Section 179 Deductions to Help with 2020 Business Taxes
The United States government has put a number of stimulus and small business relief packages into the works this year in an effort to stimulate the economy — and assist businesses in staying solvent through the crisis.
To encourage enterprises to invest in new assets, Congress has approved new rules governing the depreciation and expensing of acquired property — assets — such as new office equipment. The specifics are outlined under Section 179 of the Tax Code, known as the Section 179 Expense Deduction.
Let’s explore how it works.
Understanding Assets
Before we get into the nuts and bolts of Section 179, you need to understand how the IRS classifies assets.
An asset is property you purchase to help your business produce income. There are six categories that govern non-real estate assets that range from three-year property such as tractors and tools to five-year properties such as office equipment, computers, and cars to seven-year property like office furniture and appliances.
The year designation refers to the number of years during which you can depreciate, or write off the cost of, that property.
Office equipment falls under the five-year category, so you could write it off over the course of five years. But, under Section 179 this year, the IRS is offering bonus depreciation. That means instead of spreading the deduction over a period of time you can deduct the entire cost of the asset the year you buy and use it. And that is a bonus for many business owners who need to upgrade or replace essential office equipment.
How Section 179 Maximizes Your Write-Offs — And Helps You Get the Equipment You Need
This year, Section 179 allows you to deduct up to $1,040,000 in assets on your 2020 tax returns, with a cap on equipment purchases of a generous $2,590,000. The equipment is required to be used for business more than half (50%) of the time to qualify.
Bonus depreciation is being offered in 2020, meaning you can deduct 100% of the item’s cost this year. What is even more helpful, is that the purchase of both new and used equipment can qualify your asset for this deduction.
Small businesses can purchase brand-new or refurbished office equipment and deduct the entire amount of the purchase on their 2020 taxes.
Let James Imaging Help Your Wisconsin Business Take Advantage of This Deduction
At James Imaging, we work with businesses of all sizes, so we understand how critical the right equipment is to keep productivity high and business running smoothly.
As business owners ourselves, we are always looking for ways to maximize our competitive edge, and we love being able to pass that knowledge on to our clients.
This year, we can not only pass along the deduction information, but also help Wisconsin businesses gain a firm footing in these difficult economic times by supplying the widest variety of cutting-edge office equipment.
Our suite of copiers, laser and multifunction printers, wide-format printers and production print systems can bring a new level of efficiency to your workspace, helping even a pared-back team achieve revenue-boosting levels of productivity.
Help your company thrive in 2020 by using Section 179’s bonus depreciation to outfit your office for success. Reach out to a professional at James Imaging Systems for information on our product lines.