To Buy or Not to Buy- Tax Incentives for 2011

If you’ve been thinking of purchasing new technology equipment- 2011 is the year to do it!

Most small business owners know the strain that expensive equipment purchases can put on a business’ finances and operating costs.  You know you need to upgrade those old PCs and servers but not quite sure you want to cut the check.  A revision to a small business tax incentive could be the solution to get the right technology in place while saving your company thousands.

An increase in the Section 179 Depreciation Deduction Revenue Code increased the deduction limit in 2011 to $500,000 for assets up to $2 Million and now includes purchases on software!  This means that small businesses could deduct the total cost of certain purchases on equipment one time rather than having to depreciate it over time. This can have huge tax advantages for small businesses because large equipment purchases can significantly reduce their tax obligation.  Moving forward with all those old computers you’ve been holding off on replacing or that major server replacement you’ve been weary to proceed with could actually save you money in taxes if you move forward before the end of 2011.

Let’s walk through an example of possible savings on a purchase of $50,000 for new equipment:

Original Cost of Equipment: $50,000.00

Assumed Tax Bracket: 35%

Total First Year Deduction: $50,000.00

Tax Savings on Equipment Purchase: $17,500.00

Lowered New Cost of Equipment after tax savings: $32,500.00

This deduction applies to most equipment your business will purchase, finance or lease so it pays to do your homework on how much spending in 2011 and claiming on Section 179 can save your business.

BEWARE:  If you wait until 2012, the limit on the Section 179 deduction will decrease to only $125,000 for assets only up to $500,000.

Contact everonit@everonit.com today to see how we can help you get the right technology solutions in place before the end of 2011 to take advantage of these significant savings.

More information on Section 179 can be found at http://www.section179.org or by speaking with you tax advisor.

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This entry was posted on Friday, September 23rd, 2011 at 1:30 pm and is filed under Small Business Management Tips. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

One Response to “To Buy or Not to Buy- Tax Incentives for 2011”

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