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Monthly Archives: December 2019

Is It Time For a Server Upgrade?

While many of us may not physically see our servers as often as we see our personal terminals, we interact with them directly or indirectly daily. Within your office network, the server is the heartbeat of the entire system. Since we rely on them without directly interacting with them we tend to forget that they’re there. However, just like with any other type of computer, servers can expire and need replacing from time to time. Have you checked your servers lately?

Section 179 Deductions

For those that have been following our blogs this month, you’ll recall that our topic is Section 179 tax deductions. As a quick recap, this is a section of the tax code that not only allows you to write off purchases made for business purposes, it will let you take the full value at one time versus the past option of making you deduct a depreciated percentage over multiple years. While it doesn’t give you credit for the total cost of your business investments, it does allow you to legally avoid paying tax on the funds used for these purchases.

The purpose behind Section 179 is to give businesses a break when they are just starting out or are expanding, therefore allowing them a chance at making a profit (or at least avoiding too much of a loss) while making major purchases. While the total amounts are subject to change, the law currently allows write-offs of up to $1 million for single purchases and a maximum of $2.5 million total per year.

As always, we need to remind our readers that we are not tax experts and this information should not be taken as the final word. Every business and situation is unique, so please consult your company’s CFO or other tax and accounting professionals before making any decisions or purchases.

Are You Ignoring Your Servers?

As we mentioned earlier, your servers can be an “out of sight, out of mind” affair. However, if you’re working on an internal network, (in the same building or remotely), you are likely interacting with one or more servers throughout most of the day. Just like with terminal computers, they are subject to a finite lifespan, either becoming obsolete or just wearing down. This can cause several potentially critical problems for your business. For instance; network speed might become an issue. This can affect how quickly information travels to and from the server and your computer or between users of the network itself.

In addition, storage can become difficult to access. While servers typically have much more capacity than the average desktop or laptop, that isn’t to say that it’s unlimited. Cloud storage and data back-up are becoming increasingly popular these days, but that’s not to say that there aren’t situations where it would be preferable or necessary to stick to a local, physical server. For example; if your office deals with sensitive medical information you’ll need to remain HIPPA compliant, and cloud storage may not be a safe choice for you. That means you’ll have to be extra diligent about keeping your on-site servers and back-up systems healthy.

Backups Don’t Last Forever

Many of us remember when we first used floppy disks or CDs for our computers, thinking about how they would outlive us — only to have our expectations dashed with corrupted data after just a few uses. Back-up systems in any form have their limitations, such as magnetic tapes becoming demagnetized or servers getting an unexpected electrical charge. Whether you’re using a back-up drive or a physical format, you need to understand that if you are archiving information that needs to be stored indefinitely, you’ll need to plan to transfer that data to another form of storage every 5-10 years depending on technological advancements.

There is a fairly new medium called M-Discs that, due to their unique material and technology, are reported to keep data safe for 1,000 years. While that may be theoretically possible, try to convince the horde of dads who bought those 100-year lightbulbs for $40 apiece only to have them burn out in about a year! Remember that no matter what the company selling to you may say, nothing is permanent. If your data is worth keeping, it’s worth transferring every few years.

With that in mind, as the year comes to a close, perhaps this would be a good opportunity to look over your current equipment and see where you stand. If you can’t find any records to tell you the age of the drive, checking to see when the first files were transferred could be a good place to start and at least give you a good estimate.

Now’s the Time!

Remember that both servers and back-up devices are important elements of many pieces of equipment that need to be updated and replaced at some point. If you’re coming to the end of 2019 and finding that you had a better year than expected, or have unused funds sitting around, take advantage of Section 179 deductions so that you can lower your tax liability while making business-critical equipment upgrades.

You’ll never know what tomorrow will bring, let alone next year or the year after. It’s impossible to predict if you’ll have the funds when the servers or backups fail or simply don’t have the time to address the issue. By upgrading your equipment while we’re still in tax year 2019, you’ll be setting yourself up for success for next year and possibly the years ahead!

Windows 7 Replacement

The worst kept secret in the IT world right now is that Microsoft will end support of Windows 7 on January 14th of 2020. If you’ve been following this story at all, perhaps you’ve seen that many people are discussing this across all industries. And if you haven’t been following it, you’re probably wondering why this is such an important topic. It is important because it may affect you and your business.

Why Windows 7 EOL Matters

It may be hard to believe, but Windows 7 has been out for over ten years! At the time it came out, it was heralded as a new beginning for Microsoft — since they were just coming off of a series of disastrous releases mixed in with their successes. (If you don’t remember Windows ME, you’re better off). The next version that came out, Windows 8, appeared to be another dud, so many users held onto Windows 7 as it was a proven operating system. Unfortunately, this has stopped many users from upgrading since then. In fact, some estimates from earlier this year show about 1 billion computers still running Windows 7!

What End of Life for Windows 7 means for you is that Microsoft will no longer provide support or updates for that operating system. While there will be some exceptions, (you will be able to pay substantial fees for certain updates and limited support), all Microsoft support will be done away with within three years. Even so, the cost of this supplemental measure is more than updating to Windows 10, so why spend money on a dying platform?

Hackers are paying attention to this deadline, so you should too. Older versions of Windows, for both computers and servers that have surpassed support, have continuously become victims of hacking campaigns. Remember; when a hacker finds a way into Windows, the team at Microsoft figures out how it’s being done and will send out a patch, which is the whole point of security updates. With Windows 7 being at the end of its life, once the updates come to an end and a hacker finds a way to exploit the system, you can be sure that he’ll be telling all of his friends how easy it is to breach.

Section 179 to the Rescue!

With all the new security benefits plus the updated features of Windows 10, what possible reason could someone have for not upgrading? One of the most common reasons is cost. While upgrades used to be free, Windows now charges $99 per license to upgrade. That can be a significant charge for anyone, and it’s especially costly if you have to purchase software for multiple terminals.

As we’ve mentioned in previous blogs, Section 179 allows companies to take deductions of the full value of the property purchased for business purposes within the same business year. If you make the purchase this year, you can upgrade the software on your office systems and take it as a deduction on your 2019 taxes. While that doesn’t exactly eliminate the cost, it will make your burden much easier to bear.

Not Just the Software

The other reason for not upgrading is that while businesses would like to upgrade, their hardware won’t support the new OS. This is a valid argument since many of the machines that came out around the time Windows 7 came out, which is ten years ago, are not able to support Windows 10. Or would run very slowly at the very least. If you find yourself in this camp, the fact is that you’ll need to upgrade your hardware to use Windows 10.

However, if you are currently using computers and servers that are out of date, it would probably be in your best interest to upgrade for reasons other than just Windows. Many other software programs that you currently (or would like to) use may not be able to run their latest versions on these terminals as well.

Just like with the OS software, while there is an upfront cost involved, you would be able to include any hardware updates with the other Section 179 deductions that you currently have for the tax year 2019. Note that this also includes any related costs. For example; you may pay for shipping or set-up in addition to the actual cost of the machinery, so you can write that off, too. Did you include service contracts, warranties or insurance fees? That would be included in the deduction as long as it is implemented this year.

The fact of the matter is that time is running out. Thankfully, Section 179 deductions help to lessen the blow of the cost, though this isn’t something that can be pushed aside indefinitely as there are real consequences to consider.

While we are discussing the theme of Section 179 deductions in our blogs this month, we need to remind our readers that we are not tax advisors. The information we provide is for general discussion, and before making any decisions, please speak with your company’s CFO or other tax and accounting professionals. That being said, remember that current Section 179 laws allow you up to $2.5 million in deductions that you can write-off in 2019. If you find yourself in need of a system upgrade, now is the time to do it!