Don’t miss out on the great Section 179 tax break offered by the Tax Cuts and Jobs Act signed into law last November to upgrade your ERP software system!
Essentially, Section 179 of the IRS tax code allows businesses to deduct the full purchase price of qualifying equipment and/or software purchased or financed during the tax year. That means that if you buy (or lease) a piece of qualifying equipment, you can deduct the FULL PURCHASE PRICE from your gross income in the 2018 tax year.
It’s an incentive created by the U.S. government to encourage businesses to buy equipment and invest in themselves.
Section 179 limits were increased, which now allows businesses to write-off up to $1,000,000 of qualified capital expenditures, including software. In addition, the bonus depreciation is 100% and is good through 2022.
This should mean a substantial boost to your bottom line this year. But, to get the deduction for tax year 2018, you have to act now, as once the clock strikes midnight on December 31st; Section 179 can't increase your 2018 profits anymore.
Financing new software and/or equipment in the latter part of the year is especially profitable as your cash outlay is minimal for the first year and your cash flow is optimized in 2019.
Why? Because the amount you deduct will exceed your cash outlay for 2018 when you combine (i) a properly structured Equipment Lease or Equipment Finance Agreement with (ii) a full Section 179 deduction. It is a bottom-line enhancing tool (plus, you get the new equipment and software you're adding to your business).
The $179 tax benefit means that you (a) get your equipment, vehicles, and/or software now, (b) get to take full advantage of the Section 179 deduction in 2018, and (c) get Section 179 bonus cash as well. Check out Section179.org for more details.
To figure out what your deduction would be, use this handy calculator by Section179.org.