IT’S YOUR LAST CHANCE TO MAKE TECHNOLOGY PURCHASES FOR 2020 TAX WRITE-OFFS!

The end of the year is just around the corner, and for many businesses this means a discussion with their accountant about potential investments that would impact their 2020 taxes.

Companies can of course upgrade their business IT solutions at any time of the year. But upgrading them at the end of the year means they’ll see the benefit back even faster since tax time is just around the corner.

There are several advantages to choosing November & December for your IT purchases, these include:

• YOU CAN WRITE OFF PURCHASES AND DEPRECIATION ON TAXES IN A FEW WEEKS
• YOU BEGIN THE NEW YEAR MORE PRODUCTIVE & SECURE
• TECHNOLOGY IS OFTEN ON SALE DURING THE HOLIDAYS
• SOME BUSINESSES SLOW DOWN AT THE YEAR-END, GIVING THEM THE TIME THEY NEED FOR UPGRADES/TRAINING

Why is it important for your Tennessee business to stay on top of evolving technology?

Because companies that make the best use of technology and are considered “digitally advanced,” do better financially than those that lag behind.

According to a small business study by Deloitte, digitally advanced small businesses:

• SEE NEARLY 4X AS HIGH YEAR-OVER-YEAR REVENUE GROWTH
• EARN 2X AS MUCH REVENUE PER EMPLOYEE

We’ll go through the types of technology deductions that businesses can make in 2020 to reduce their tax burden and which areas of IT to consider for upgrades.

SECTION 179 (FORM 4562) QUALIFYING PURCHASES

IRS Form 4562 for depreciation and amortization has a Section 179, which details qualifying tax-deductible purchases. This year, the limit has been raised to $1,040,000, and there is also a 100% bonus depreciation deduction.

You’ll want to go through your deductions with your accountant, but here are the basics of the IT purchases that are deductible.

COMPUTERS & HARDWARE

You can deduct the cost of a new or used computer purchased for business use. Other hardware would include things like a server or physical firewall solution.

OFF-THE-SHELF SOFTWARE

You can also deduct software purchases as long as the software is publicly available (off the shelf) and not custom developed for your company only.

OFFICE EQUIPMENT

Office equipment is also deductible, and this can include things like wireless printers, headsets or desk sets for VoIP phone systems, wireless network components, and more.

SECURITY SYSTEM

Security systems are another category of qualifying business purchases for 2020 tax write-offs. This includes things like mounted IP security cameras and doorbell cam systems.

CELLULAR TELEPHONES

The IRS instructions for Form 4562 also specifically state that cellular telephones and “similar telecommunications equipment” qualify as tangible personal property under the Section 179 deduction.

ASSESSING THE BEST YEAR-END TECHNOLOGY PURCHASES TO MAKE

When investing in your IT infrastructure, there are several areas you can look at. It’s best to get help from an IT professional when doing a year-end technology assessment, so you can choose the most cost efficient and impactful purchases.

Here are several areas to consider.

REPLACE OUTDATED COMPUTERS

If you’re running a computer older than 4-years old, it could be costing you $2,736 per year in lost productivity, downtime, and other issues. That means you may actually save money by upgrading to a newer model rather than keep an older one operating.

You may want to take a look at all your employee workstations and laptops, check their age, service records, and ask your team how the device is running.

BOLSTER CYBERSECURITY

Cybersecurity is an ongoing need and one that is always evolving to keep up with the new malware, ransomware, and other threats that hackers create.

You’ll want to look at things like firewall security, device security, and possibly update your router to Wi-Fi 6, which has significantly better security than Wi-Fi 5 routers.

FACILITATE REMOTE TEAMS

Remote work became the norm in 2020 due to the pandemic, which is still very much around. If you’re one of the many Tri-Cities area businesses that had to scramble to put tools in place to facilitate remote teams, it’s a perfect time to look at permanent solutions.

OPTIMIZE BY REPLACING MANUAL PROCESSES

Manual processes often hold small businesses back because they hit a wall where a process cannot physically be performed any faster doing it manually.

Nearly 60% of surveyed workers say that they could save 6+ hours per week with the use of automation to replace manual workflows.

Look for time-consuming processes that involve manual entry into spreadsheets or other applications. With the right software tools, these workflows can often be sped up quite a bit, enabling your team to dedicate that time to more forward motion for your business.

SCHEDULE A YEAR-END TECHNOLOGY ASSESSMENT TODAY!

Unbound Digital can help your Tennessee business identify the most beneficial year-end technology purchases that can also qualify for tax deductions on 2020 taxes.

Contact us today to schedule your year-end assessment. Call 423-335-2461 or reach us online.