Never have I promoted Government “incentives”, after all we all know they are really tax dollars taken from Peter to “help” Paul. With that aside, The American Recovery and Reinvestment Act of 2009 dumps $787 BILLION to “lift” the economy via tax incentives and government spending. Part of the law give the Small Business Administration (SBA) $730 Million to allow easier credit for small business loans.
Small business owners can take advantage of this package and grow their businesses. The reason I write about this is that some benefits specifically apply to technology purchases and others are “for the bottom line” which means capital for needed equipment (like technology).
The package extends a tax deduction that allows small businesses to deduct up to $250,000 a year in new equipment purchases including technology (laptops, desktops, servers, network security, software upgrades…). Section 179 of the tax code allows small businesses to take a deduction for equipment purchases in one tax year instead of over the life of the equipment (usually 5 to 7 years).
The law also keeps in place the 50 % bonus depreciation President Bush put into place in 2008. Say you buy $500,000 in equipment this year (2009), $250,000 can be immediately deducted with section 179 mentioned above, plus another $125,000 (1/2 of the balance) can be deducted this year also because of the “bonus”. It is my understanding the remaining balance ($125,000 in this example) would be depreciated over the useful life of the equipment.
Both of the above should allow any of you who need new equipment and especially new or upgraded technology to write off in full or almost full the cost this year.
There is one more section that may help, another part of this Act allows businesses that lost money in 2008 to “carry back” that loss to their prior year’s tax returns by amending returns up to five years back. Previously this could be done up to two years back. This does only apply to those who have $15 million or less in gross income.
Since I am not a “tax” lawyer or professional (CPA), this is just my reading the law to you, see your tax professional(s) on how this could help you, and remember this is a government program, there are loopholes, rules and exceptions out the wazoo just to keep some of us from gathering the benefits.
Oh, if you do decide to spend some of that capital, IFix Computers in Beautiful Branson Missouri (417) 337-7184 would be more than willing to help you with professional advice on hardware and software that will benefit your business.
Until we meet again, have a virus free week!