The end of the year is fast approaching, which means there are only a couple of months left to make technology purchases that can be written off on your 2020 business taxes.
Section 179 of the U.S. Tax Code allows for technology equipment and software deductions that can reduce your tax burden for the year, but those purchases do need to be made in 2020.
Now is the perfect time to have a review done of your technology infrastructure and future needs to find where upgrades can give you the biggest benefits. You’ll want to look at everything from cybersecurity, to data cabling, to cloud productivity tools.
With tax time just around the corner, a technology purchase made at the end of the year can mean a faster turn around on the benefit of a deduction. For example, if you make a purchase in November and do your taxes in February, that’s only a few months before you see some of that money back in tax deductions.
What are This Year’s Technology Deductions?
For 2020, businesses can deduct 100% of the price to buy, loan, or lease equipment and software up to $1,040,000 using the Section 179 deductions.
There is also a bonus 100% depreciation deduction this year that allows businesses to depreciate the full cost of a purchase, rather than having to spread the depreciation out over several years.
There are quite a few types of business equipment that fall into this deduction category, including vehicles and tangible personal property. When it comes to technology purchases, here’s what you can deduct:
- Machines (i.e. server or other technology equipment)
- Software (“off the shelf”, meaning not custom designed)
- Office equipment
- Building improvements (such as alarms and security systems)
Equipment can be new or used, but if it’s used it has to be “new to you” and purchased, leased, or financed in 2020.
What to Consider for Year-End Technology Purchases
You want to be strategic when making year-end technology purchases and ensure those investments will pay off in things like risk mitigation, productivity, and better customer experience.
It’s a good idea to work with an IT professional, like Cris’s Tech Repair, so you can make sure you’re getting the most value for your dollars.
Here are some considerations for your year-end technology upgrades.
Computers Older That are 4+ Years Old
Are older computers holding back employee productivity? Studies show that if you keep a computer too long, it can cost $2,736 per year in lost productivity and maintenance (more than the price of a new standard business computer).
Computers start having more problems as they reach 4-years old. This includes higher incidents of data breaches, data loss, and more service calls. Replacing older computers can be a smart end-of-year investment that can also be written off on your taxes.
Software to Power a Remote Team
The pandemic completely changed the way businesses look at work-from-home employees. During the stay-at-home orders companies were scrambling to find ways to keep everyone connected and enabled.
Now that the immediate disruption has subsided, it’s a good time to look at any team collaboration software, cloud productivity tools, or VoIP systems that you’ve been wanting to put in place to power a remote team.
Data Security Hardware & Software
Cybersecurity is an ongoing priority for businesses. Just one data breach can cause a small business to close indefinitely due to the costs and downtime.
Ransomware attacks, credential theft, and other online attacks are only growing, so investing in your cybersecurity is a good decision at any time, but especially when you can write-off the costs.
A few potential cybersecurity purchases include:
- Firewall with advanced threat protection
- Cloud Application Security Broker (CASB)
- Endpoint device manager
- Upgrade of Microsoft 365 for advanced capabilities like use of sensitivity labels
- MSP monitoring and security software for all devices (on-premises and remote)
Physical Security System
A security system is one of the allowable business write-offs. IP security systems are cost efficient and can easily be installed in any sensitive areas.
They can also be used to keep an eye on production activities on a line and help employees feel more secure in places like dark hallways and parking garages.
Using a front door security camera can also facilitate deliveries, allowing two-way communication, and allow you to keep an eye on your building from any location.
Automated Systems to Replace Manual Processes
One of the biggest productivity drags are manual processes that employees have to do day in and day out. By upgrading software that can add automations to these tasks, you can eliminate manual tasks and free up employees to work on more forward motion activities.
Schedule Your Technology Upgrade Review Today!
Cris’s Tech Repair can help you evaluate your technology, budget, and future needs to decide on the best year-end upgrades for your Lake Okeechobee business.
Schedule a consultation today by calling 561-985-4961 or contacting us online.