You've heard about the Section 179 tax deduction. Now you'd like to know if it can benefit your small business. We're here to simplify Section 179 and answer your questions.
The government enacted Section 179 of the tax code to encourage small businesses to buy equipment and invest in themselves. This means an opportunity to grow your business and, if your tax situation allows, deduct the full purchase price of acquired equipment (up to $25,000 in 2014) during the current tax year rather than depreciating that property over time. Here's an example of how Section 179 may help you.
How Can Section 179 Benefit My Business?
When your business buys certain pieces of equipment, such as furniture, it typically gets to deduct that expense over time as a depreciating asset. In that case, your financial adviser might suggest taking the maximum depreciation deduction available at the time. As an alternative and depending on your individual situation, your advisor may recommend you take advantage of Section 179 deductions and write off the entire purchase price during the year the equipment is acquired and placed into use.
How Does Section 179 Work?
The Section 179 deduction can be taken whether the equipment is financed or purchased outright. Please note: In order to take advantage of Section 179 for the current tax year, the equipment must be purchased or financed and placed into use before December 31, 2014. If you choose to finance the equipment, Section 179 deductions may exceed the total amount of loan payments you make the entire first year. For some, this strategy can make a new equipment purchase more affordable.
How Can I Learn More?
If you're looking for further information, here’s a comprehensive resource we’ve found that may answer many of your Section 179 questions. Since Professional Solutions Financial Services does not provide legal or tax advice, and because individual business situations differ, we always recommend you visit with your financial/tax adviser to determine Section 179 eligibility requirements and whether this section of the tax code can benefit your business.
When you’re ready to finance business equipment, we encourage you reach out to us about the flexible and competitive equipment loans available to you from Professional Solutions.