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Resources: IT Consultancy

Tax 179

Writing Off Technology Purchases for 2020

Regardless of your line of work, all businesses have one common goal in mind: to generate revenue. Of course, we all want to make a difference in the world and have satisfaction from hard work. However, if you’re not earning more than your spending, you need to make some changes. While large black numbers at the end of the year put a smile on your face, the tax bill that comes along with them usually wipes it right off. Thankfully, there are ways around giving up all of your hard-earned profits to Uncle Sam. Relief can come in the form of section 179 deductions. But what are these and how can you legally use them to write off technology purchases and maximize your company’s profits?

In our series of blogs for the month,  we will be discussing just that. Before we get too deep into the weeds, know that we’re not tax professionals, and these articles are purely informational. If you want specifics as to how Section 179 deductions can work for you, please consult accounting professionals.

Time to find a Write-Off? 

Everyone loves to talk about write-offs, though few people actually understand the specifics around them. Basically, a write-off involves reporting a business expense to the IRS to avoid taxation on the money used to pay for it.

Write-offs seem great for a business owner or manager. Though, in practice, you have to be very careful to avoid trouble with the IRS. After all, you can be sure that they will be scrutinizing any revenue they lose. You’ve probably heard of people who went a little write off crazy in the past now find themselves with 3 square meals a day for free in federal prison!

Can You Write Off Technology Purchases?  

How do you know exactly what to write off and how does this apply to technology? Basically, you can categorize business write-offs into six forms:

Business Personal Property

This includes just about anything that could move from your business base. These can range from office supplies (like pens and staplers) to electronics or even heavy equipment like forklifts. If it is relatively easy to move from one location to another, then it’s considered business personal property. Often technology upgrades will fall into this category, so you can write off technology purchases. They could include new desktops, laptops, servers, or converting everything to the cloud.

Office equipment

This category covers larger objects that you cannot easily move. For example, you can think about larger printers, medical diagnostic machinery, etc. If not covered under business personal property, you can write off technology purchases, here.

Machinery

This is really a category for anything else that produces for your company. Examples in this category might include industrial machinery that you couldn’t just put on the back of a pickup truck. These would usually include the sorts of large machines that you would find in a factory or business like that.

Business vehicles

This is a category that could get someone in trouble quickly. A vehicle, such as a car or truck, purchased by the company and only used for company purposes at any given time falls into this category. Sometimes, a vehicle is used for a combination of work or personal purposes. If that’s the case,  report the percentage of the time the vehicle is used for business versus personal trips.

Property

This includes any buildings or land that your company owns and is used exclusively for business purposes.

Capital improvements

By definition, capital improvement is a structural change or restoration of property that will enhance its value, prolong its useful life, or adapt it to new uses. This does not include any sort of work you do to a property. For instance, the addition of an air conditioner or furnace could be considered capital improvement while doing interior decoration is not. New cable runs to enhance Internet access to your building may also fall into this category.

Tax Write-offs Are Income! 

For many of us, tax returns are a bonus. Perhaps if you get one, you take that money to go by a new television or go on vacation. However you use it, most of us consider tax returns a little bonus, not something in our personal budgets.

This should not be the case with businesses. Section 179 deductions are not bonuses, but rather strategic ways of not paying too much in tax. One of the reasons that good tax people are worth their weight in gold is they save your company from paying too much in taxes.

A good company will factor in write-offs when making their budgets and factoring quarterly and yearly profits. For some companies, particularly small companies, those write-offs might be a large portion, if not the entirety, of their profits for the year!

Write off Technology Purchases to Plan for the Future 

While many write-offs are incidental or just factoring in day to day business expenses, planning well can make a huge difference in future projects. For example, if you’re in the black more than you anticipated this year, take the opportunity to refresh your technology, consider moving to the cloud, implementing virtual office space, or making server upgrades. By doing something like this, you can make sure that you are benefitting your business while still turning a profit.

The IRS put section 179 in the tax code for the purpose of letting businesses do business without punishing them to death with taxes. They know that if there is an incentive for companies to spend, it will work out well for everybody in the end. So, don’t be afraid to make investments before this crazy year comes to an end. If you need help to strategize your next project, just reach out to us.

Virtual Office Scalability: Is Your Technology Setup Scalable?

If you aren’t thinking about virtual office scalability right now, you should be. Thanks to a microscopic virus, everything changed in an instant, including the business world. While we know that things generally fluctuate over time, markets rarely change so drastically without some leading indicator.

So, what does this mean for you? No doubt, you’ve already found your employee needs changing quickly. While some businesses are seeing consistent falls, others are picking up speed quickly or fluctuating month by month. As such, your employee requirements may be changing over time. Adding, removing or changing employee roles can often be a major hassle, wasting time and resources in the process.

If you’ve been following our series this month, you know that we’ve been focusing on virtual offices mobility and security. In this article, we’ll be focusing on how virtual offices can help to keep your operations as scalable as possible.

Virtual Office Scalability: Quick Review

A virtual office is a system where all of your office technologies are cared for and stored in a cloud-based service rather than using on-premise servers. It allows seamless access, wherever you are, while maintaining security. They work well because, depending on your industry, few (if any) of your employees really need to work in a physical office all the time.

Under a true virtual office setup, all of your programs, communications and storage operate like you’re at the office regardless of device. Since your MSP still monitors the network, they maintain a safe atmosphere and can quickly resolve any issues.

Pre-COVID Operations

Most businesses fluctuate in their employee needs over time, with many designed to be seasonal. But what happens if you need to hire, replace, move or eliminate employees in a hurry. The short answer to that has typically been “You can’t” or “These sorts of things take time.” After all, you need to find them a place to work, equipment to work on and, of course, software licenses depending on their role in the company. In addition to this, you have to worry about the maintenance and upkeep of both their physical workspace and equipment.

As a result, bringing on new hires, replacing people who have left, or scaling up and down quickly becomes a major burden. You either end up holding on to a bunch of technology just in case or scrambling every time you hire. But not scaling effectively can cost you even more in the long run in terms of lost productivity and opportunities. It’s a bit of a “damned if you do, damned if you don’t” proposition.

A Brave New Solution for a Brave New World

Virtual office is the answer to any scalability challenges. To understand just what we’re talking about, let’s use a made-up, real-world example.

Let’s say there’s a company with 50 employees. The owner realizes that the sales, marketing and accounting people have no need to actually be in the office to do their jobs, especially under current circumstances. So, they sent all of them to work at home using their own devices. Remote servers handle the computing rather than the systems themselves, eliminating concern over the speed or age of computers at home. The typical VPN security concerns also go out the window. As long as they have a stable internet connection, they are good to go!

A little while later, the owner decides that they need to ramp up staffing to prepare for busy season.  Said owner gives their MSP a call, explains the situation, and the technician sets up all the new licenses needed within the hour. Simple as that! Instead of having to wait to provision and deploy hardware, IT can handle any scaling seamlessly.

Virtual Office Scalability, Taking Advantage of the Opportunity

While 2020 quickly changed our idea of what a normal office is, it’s really been a long time coming. Companies have been migrating to similar solutions for almost a decade with varying degrees of success. However, with current technology and infrastructure, it’s never been easier to implement a virtual office solution like this.

If you’re struggling with a piecemeal system you rushed together earlier this year or if you are looking for a way to make your technology more scalable, contact us today! Virtual office scalability is something all companies should be actively maintaining. We can show you how affordable a virtual office can be and just how quickly it can be in place. If there is any silver lining to this interesting year of ours, perhaps it’s the kick in the pants we needed to move our businesses into the future.