Put Cash in Your Pocket with the Section 179 Deduction

The end of the year is upon us. It's time to start thinking about taxes before Decemeber arrives.

The Section 179 deduction give you the opportunity to save a substantial amount of money on large purchases. If you are thinking about upgrading your phone system, computer network, software or a number of other assets for your business, now is the time.

1. You can save your business some serious money.

The Section 179 deduction was enacted to help businesses make major purchases and reinvest those savings into hiring and other purchases to encourage growth.

Essentially, Section 179 of the IRS tax code allows businesses to deduct the full purchase price of qualifying equipment 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 you gross income.

The limit of the deduction is currently $500,000. The limit is going to be reduced in 2012--so it makes sense to take advantage of the 179 deduction this year.

2. How does it work?

Basically, with most deductions, when you purchase an asset you get to write off a little at a time through depreciation.

With the Section 179 exception, you get to write off the full amount all at once. There are only a select number of items that qualify for the deduction.

On these select items, rather than waiting over a period of time to realize these deduction benefits, businesses have more cash on hand to spend on new hiring, new equipment and other improvements.

A typical 179 deduction looks like this:

3. Your business phone system qualifies.

Section 179 is dedicated to large purchases. It's sometimes known as "the Hummer tax deduction" because it lets you write off SUV's that weigh more than 6,000 lbs. Other items that you can deduct through Section 179 are computers, software, office furniture, property used for business and office equipment--including your phone system.

If you are thinking about upgrading your phones now is the time. Make the move before the end of the year to save big on your 2011 taxes.

4. You can lease equipment and still take advantage of the 179 deductions.

Leasing equipment with the Section 179 deduction in mind is a preferred financial strategy for many businesses as it can significantly improve cash flow--but also boost profits as well.

The advantage of leasing with the 179 deduction is that you can deduct the full amount of the purchase without paying the full purchase price.

5. What are the next steps?

Contact your accountant and contact Blue Ocean to see how we can help improve the profitability of your business. Not only can we save you money through this tax deduction, our VoIP phone systems will save you significantly compared to your current system.

For more information, please contact us at 205-776-6900.