Get Yourself a Holiday Gift
As we head into the end of the year our attention turns to family and the holidays, but as anyone who has ever owned a business will tell you, its also time for tax planning. Yes, at a time when most of the world is winding down, the entrepreneur in the room is thinking about how to minimize his taxable earnings. Doesnt that just ooze Happy Holidays!
It actually can! But first you need to take advantage of the Section 179 depreciation deduction and buy yourself a gift!
Early in my career, working in telecommunications, the last couple of weeks of the year were fantastic! It was so quiet. Clients and prospects pushed off meetings and proposal discussions, giving way to long lunches and daytime Christmas shopping. By the 15th
, everyone was saying see you next year as we wound down, reorganized, and prepped for the New Year.
Moving to technology, boy was I surprised, the busiest time of the year is December!
There seemed to be a big push for hardware and software quotes with strict deadlines for delivery before years end. I was truly surprised by the flurry of sales activity. I couldnt understand the urgency. What was driving them to buy?
Fast forward to when I started my own IT firm. As year-end rolled around our accountant advised, Its time to buy the company some gifts. I thought he was crazy. We were trying to build
the business, why was I going to spend
money. He explained that by reducing profits with legitimate expenses you can reduce your corporate taxable burden. So, programs like Section 179, make year-end a great time to buy.
Ah ha, now I understood why my clients bought so much in December.Technology is a great option when you need to reduce profits.
The items have a large enough price tag to make a difference on your Profit and Loss statement and Uncle Sam allows companies to claim it as an expense rather than capitalizing and depreciating these assets. I am not a tax lawyer, but its my understanding that this year the Section 179 benefit is up to $250,000 (but it cannot surpass a companys total taxable income). If you had a great year this could allow for some significant upgrades.So if youve been putting off some IT upgrades, now might be the time to buy. Get yourself something nice, you deserve it.
In the meantime, I will be waiting to hear from you.