Speaker: Amanda Haraden, Senior Financing Consultant, Beacon Funding Corporation
Amanda Haraden: Hi, my name is Amanda Haradan. I am a senior financing consultant here at Beacon Funding and today I'm here to fill you in on Section 179 and why it's important for you, not only to learn more about it, but how you can learn to utilize it for you and your business. Tax season is upon us, sooner than we want to believe, and it's important to think about your write-offs throughout the year. Through utilizing Section 179, you're not only saving your business money, but in essence, you're reducing the cost of the equipment that you're purchasing for the business.
Amanda Haraden: So what is Section 179? Section 179 allows the business to deduct all or part of a purchase price during the same tax year of an equipment purchase, rather than deducting smaller portions of the equipment costs over several tax years. This can reduce your taxable income dramatically and effectively lower your tax bill for the year you purchase set equipment.
Amanda Haraden: Let's walk through a very simple breakdown. Say you purchase a piece of equipment for $50,000. Normally, you'd write off a portion of that each year during that equipment's useful life. That would spread your tax benefit into smaller increments over let's say 5 years. In this example, that would mean a $10,000 deduction each year for the next 5 years. Alternatively, when you utilize Section 179 you would deduct the entire $50,000 within the same year that you purchase that equipment. So, while deducting a little at a time can be beneficial, many businesses would prefer to receive their total tax benefit up front. So unlike other depreciation methods, Section 179 can help accelerate the tax deduction process while allowing your business to benefit immediately.
Amanda Haraden: There are a couple of requirements that you should be aware of. First. Equipment must be purchased and in use before December 31st. Meaning that if your equipment requires either build time or ship time, make sure you take that into consideration and plan ahead. That way, the equipment can both be on-site and in use before December 31st. Second, equipment purchase can be new or used. And then third, equipment technically needs to be used for business 50% of the time.
Amanda Haraden: And if you're wondering what kind of tax benefits you can expect with your purchase, Beacon Funding has a tax savings calculator available both on our website and our mobile app. It's easy. All you have to do is plug in the cost of the equipment and get a tax saving estimate right there. You'll be surprised by how much you can save, but as always, make sure to consult with your CPA or tax advisor prior to any purchase, and make sure to discuss what's best for you and your business. To learn more about the benefits and tax savings available to you, visit beaconfunding.com/taxsavings. visit beaconfunding.com/taxsavings. Thank you!