If you’re a business owner in Houston or anywhere else, beyond the normal end-of-the-year things on your mind, you’re most likely already looking ahead to your 2020 taxes.
Because there are only a few more weeks left in 2020, it’s important to consider any purchase you may want to make that can be used for tax deductions and reduce your tax burden for the year.
This year’s business deduction under Section 179 of IRS Form 4562 has been increased to an allowable deduction of $1,040,000. There is also a bonus 100% depreciation deduction on purchases of new or used computers and office equipment.
Technology purchases are a great investment in your business and can set you up for more success in 2021 through use of cloud services, more efficient computers, better cybersecurity, and more.
Now is the perfect time to meet with an industry IT professional, like Digital Crisis, to target the most cost-efficient, tax-deductible upgrades that can positively impact your bottom line.
Let’s go through allowable deduction types and what that might mean for improved productivity for the new year, in addition to a tax write-off.
IT Upgrades to Consider Before the End of the Year
One of the allowable deductions is off-the-shelf software. This means software that you purchase that isn’t custom to your company, and is publicly available.
If you’re not happy with using the public cloud through a SaaS subscription, one consideration is to move to a private cloud environment where you have complete control over the software environment your company uses.
It’s estimated that 20% of enterprise workflows are private-cloud based.
Software that you purchase to run in a private cloud environment on a cloud server would be deductible, and you would increase your security and control over your cloud environment.
Computers (New and Used)
Computers that you buy or finance during 2020 can also be used for deductions from your business taxes. This includes both new and used/refurbished devices, as long as the equipment is “new to you.”
If you have computers older than four years, then you may actually be losing money on them every year. So, an upgrade to a new computer not only saves you immediately, it also reduces your taxes.
Computers older than 4-years have the following issues in comparison with computers younger than 3 years:
- 2x as much downtime
- 3x as many data loss incidents
- 3x more security breaches
One other area to consider for new computers is your remote workers. If you have employees working remotely and using their home PCs, this can cause problems for IT security and performance/productivity.
You may want to consider a purchase of business laptops that could be used both at home and work, for remote and partially remote staff.
Another Section 179 deduction category is office equipment. This could include things like routers, wireless printers, IoT sensors, and other types of equipment to upgrade your IT infrastructure.
A few upgrades to consider in this area are:
- Network Upgrade: Upgrading to a mesh network and/or a Wi-Fi 6 router, can significantly improve network speed, security, and performance.
- On-Premises Firewall: Firewalls with advanced threat protection can keep your network and endpoints secured from multiple types of sophisticated threats.
- A/V Equipment for Video Calls: Video meetings have become the new “meeting,” during the pandemic, so you may want to consider an upgrade of A/V equipment. This could include a sound bar, smart TV, and similar meeting technology designed for high-quality video calls.
The IRS notes that “cellular telephones, similar telecommunications equipment” are considered deductible tangible personal property.
How you might use this deduction category to upgrade your office may be to purchase tablets to use with software designed to replace manual tasks. For example, if you have a manual meeting room reservation form on paper, you can make the process much more efficient using a cloud tool like Microsoft Lists run via a tablet.
You may also want to consider any company cellphone upgrades that will improve productivity.
Security system components are also a technology deduction you may want to consider. Modern cloud-based security solutions make setting up a surveillance system easier than ever, without any messy wires to install.
IP security systems are also designed to be easy to add on to, so you could purchase just the base components before the end of the year for the deduction, then add other cameras on as you like to expand the system’s capabilities.
Schedule a Year-End Technology Assessment with Digital Crisis
A year-end technology assessment can help you narrow down your options to the best and most critical IT upgrades that will have the biggest positive impact on your bottom line.
Contact us today to schedule your assessment. Call 713-965-7200 or reach us online.