As business owners, there is always something we need. In my office I could use a new laptop, the latest software, an updated printer and that fancy Wacom tablet sure would be nice, too. Maybe you need a new barcode scanner, point-of-sale system, or inventory management software, but it just never feels like the right time to drop the cash for these things, regardless of the inevitable productivity increase that would result from doing so. Something just came across my desk that just may send me on a sojourn to the Apple store. Who knew taxes could be so exciting?
The Section 179 Business Equipment /Software Deduction
Section 179 of the IRS tax code essentially allows businesses to deduct the full purchase price of qualifying equipment (including computer equipment and computer software) purchased or financed during the tax year. That means that if you buy (or lease) a piece of qualifying equipment, you can deduct the FULL PURCHASE PRICE from your gross income. The U.S. Government designed this incentive encouraging businesses to accelerate business investment. To qualify for the Section 179 Deduction, the equipment purchased must be placed into service between January 1, 2010 and December 31, 2010. All businesses that purchase or finance less than $2,000,000 in business equipment during tax year 2010 should qualify for the Section 179 Deduction.
Leasing/Financing and Section 179
Your company can lease or finance equipment and still take full advantage of the Section 179 deduction. In fact, leasing or financing equipment and/or software with a Purchase Upon Termination (PUT) Lease and/or Equipment Finance Agreement (EFA) with the Section 179 deduction in mind is a preferred financial strategy for many businesses because it allows them to realize the tax deduction in 2010 while paying for the investment over the lease term. The amount saved in taxes can actually exceed the payments in 2010, making this a very bottom-line friendly deduction.
Don't Miss Out
Section 179 can change yearly without notice, so it benefits you to take advantage of this generous tax code while it's available. Additionally, the 'Economic Stimulus Act of 2008', the 'Recovery Act of 2009', the 'HIRE Act of 2010', and the 'Small Business Jobs & Credit Act of 2010' have provided the small business owner with generous new (and higher) deduction limits. Most of the equipment your business will purchase or lease qualifies for the deduction, so do your homework and verify that your company is leveraging the Section 179 Deduction this year.
Thanks to CamCommerce for this information.
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