The tax season is one of the most, if not the most, stressful times of the year for the business owner. Every entrepreneur hopes to maximize their deductions to minimize their taxes. One of the ways to do this is using the information contained in Section 179 of the tax code.
What is Section 179?
Designed to help businesses, Section 179 allows business owners to deduct the purchase price of equipment (up to certain limits). While it does not increase the overall deduction the business owner can take, it does allow them to take it more quickly. Section 179 is valid on most types of equipment (general business equipment, vehicles, business machines and off-the-shelf software).
The equipment can be new or used property. However, the property cannot be inherited or potentially inherited. It also cannot be from an organization you have control of or equipment purchased from a relative. The rule also states the property must be used in the first year of its purchase; this ensures personal property cannot be converted to business property in order to use this rule. Other property types that do not qualify include: intangible property (copyrights, patents, etc.), furnaces and air conditioning units, land and permanent structures and property intended for use outside the U.S.
Who can Utilize Section 179 the most?
Section 179 is great for the new business that found it necessary to invest in equipment and property at the very beginning of the venture. These businesses are permitted to take the deduction right away. Section 179 can also ease the burden for established companies that purchase new equipment to support growth. Ultimately, Section 179 helps your business’ bottom line. Deducting the full cost will allow you to significantly lower the amount you pay for that equipment/property.
As you research possible deductions and plan a strong strategy for the future, don’t forget to consider other methods that can help your business grow this year. If you’re struggling to secure capital to boost your cash flow, consider working with an alternative lender like First American Merchant. Their cash advances are easy to apply for, and capital can be secured in as little as 72 hours. They even offer merchant loans to those with bad credit.
Take a little extra time to research your small business taxes, and make sure you’re utilizing all your options. Make 2017 a strong year for your small business.