There’s not much time left before the end of the year, and many business owners are scrambling for any last-minute investments they can make to use as tax write-offs.
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A benefit of making tax-deductible purchases at year-end is that in just a few short weeks when you fill out your business taxes, you can recapture some of that cost by reducing your tax burden.
For example, the average small business tax rate is 19.8%, so this means, if you make deductible technology purchases totaling $10,000, you would see an immediate “discount” in the ballpark of $1,980.00
Technology makes a perfect investment because when you invest in your technology infrastructure, you’re investing in your business as a whole. More efficient computers, networks, and security mean a boost in productivity, reduction of risk, and positive impacts on your bottom line.
But before you start rushing to make purchases, it’s important to have a strategy in place. You want to make the most needed and most impactful purchases, plus be sure they qualify for tax deductions.
What Type of IT Purchases are Deductible in 2020?
You can find full details on the type of technology you can deduct in the instructions for Form 4562, Section 179. This year’s deduction has been increased to $1,040,000, and there is also a 100% bonus depreciation.
Types of technology that can be deducted include:
- Computers: Laptops, tower computers, etc.
- Off-the-Shelf Software: Software that is publicly available (not custom)
- Cellular phones & technology: Mobile devices and accompanying equipment
- Office equipment: Servers, network-attached storage, printers, etc.
- Surveillance systems: Security cameras and accompanying devices
You can make deductions on both new and used equipment, as long as it was purchased or financed in 2020.
Where to Look for Smart Technology Upgrades
Older Computers
If you have computers at your Hamilton County, Indiana business that are 4-years old or older, you may be losing more on them in productivity and repair costs than the price of a new computer.
A study released by Microsoft found that the average cost for businesses to keep computers 4+ years old in operation is $2,736.00 per year.
Replacing older computers can ensure your team goes into 2021 prepared for peak productivity.
Network Upgrades
Networks are getting more crowded each year as IoT and mobile devices continue to get added to them. You can prepare your network now for better speed and reliability by improving your wireless router.
Potential upgrades:
- Switching from a single router to a wireless mesh system
- Upgrading to a faster and more secure Wi-Fi 6 router
Moving from Public to Private Cloud
Many companies worry about the security of relying completely on cloud providers for their business processes. When using the public cloud, your data is stored on the server(s) of the provider, but when you move to a private cloud, you have complete control over all your data, applications, and the server hosting your infrastructure.
Moving to a private cloud can be less expensive when you get a tax write-off for any software you need to purchase to run your business processes.
Cybersecurity
Just one data breach or ransomware attack can be devastating for a business. One tax deductible equipment purchase you can make to boost IT security is a next-generation firewall with advanced threat protection.
Today’s modern firewall appliances offer much stronger protections than those of a few years back, including:
- AI-based threat detection
- VPN support
- Ability to catch zero-day attacks
- Automated threat response
Remote Worker Technology
The COVID-19 pandemic has forever changed the way that many offices in Indiana and the rest of the country operate. 77% of surveyed organizations say that post pandemic, they’ll have more employees working permanently remotely 3+ days per week.
What technology does your remote team need to be successful at their home offices?
Look at things like computers, headsets, business-grade routers, and VoIP enabled desk phones.
5G Technology
We’ve been hearing about the promised lightning-fast speeds of 5G for a while, but as with any new major technology, things take a while to rollout.
This year, wireless carriers have been upgrading their 5G infrastructure, and you can look to 2021 for some of the promises of this faster network to be seen.
Look for 5G enabled mobile devices and laptops to invest in so you’ll be ready to take advantage of the improved connection speeds when they get here.
Schedule a Year-End Technology Review with Magnify247.com
We can save you a lot of time deciding what technology to purchase by doing a full review of your current IT and your business needs.
