There are just a few months left of 2020. It’s a time when accountants are often recommending year-end purchases that can be used to lessen a company’s tax burden.
If you’ve been putting off any upgrades of hardware or software at your Charlotte business, now is the time to consider making some, so you can take advantage of technology tax breaks for this year.
Have you been wanting to get Microsoft 365 for your team to boost office productivity and make remote working easier? Do you have some computers in service that are way past their retirement date?
The good news is that you still have plenty of time to get year-end technology upgrades purchased so you can deduct them from next year’s taxes. Another benefit is that Section 179 deductions include both technology equipment and business software.
Which Technology Purchases Can Be Deducted for 2020?
Under section 179 of the U.S. Tax Code, there are several different business-related expenses that can be deducted.
- Office Equipment
- Business Vehicles
Deductions can be for both new and used technology equipment and computers. However, if used, it has to still be a purchase (or financed loan or lease) made in 2020. For example, a refurbished computer that you bought.
Business software can be deducted as long as it isn’t proprietary or customized only for your company (i.e. it has to be “off the shelf”).
How Much Can I Deduct?
There are two types of deductions that businesses can leverage when they upgrade their technology in 2020.
One is a write-off of the entire purchase price of qualifying equipment, computers, and software up to $1,040,000.
The other is a bonus depreciation of 100% for equipment, with a spending cap of $2,590,000. Businesses will usually use this deduction for any overage of the limit from the write-off.
Of course, talk to your tax professional to see which deductions fit your needs best.
Where Should We Consider Technology Upgrades?
You want to make a strategic plan with your IT professional to ensure your upgrades are going to give you the best payback on your investment in efficiency and productivity.
Here are a few areas to consider for upgrades.
Manual Process Replacement
Some manual processes, such as onboarding an employee, can cost as much as 20x more than automating those document-related tasks.
One area of opportunity for technology upgrades that will pack a big punch when it comes to productivity and cost savings is to automate manual processes. This can be done through the right software solutions and integration tools.
Put a Solid Business Continuity Plan in Place
Many businesses are partially through a business continuity plan, having some systems in place, but not all of them. The 2020 tax deduction can give you the catalyst you need to finally get the assets for your entire plan set up and implemented, so you’ll be ready for anything 2021 and beyond may bring.
Review & Strengthen Your Cybersecurity
2020 has not been a good year when it comes to cybersecurity. Phishing attacks taking advantage of the coronavirus increased dramatically. Cyberattacks overall jumped 30% between July and August 2020 alone.
When making technology upgrades, investing in network security can help you avoid a devastating data breach or ransomware infection that can take your business out for weeks.
Some of the IT security upgrades to consider include:
- Firewall with advanced threat protection
- Endpoint device manager (like Intune that comes with Microsoft 365 Business Premium)
- Cloud access security broker (CASB)
Many businesses had to use remote workers at least part of the year in 2020, and a lot of businesses in Charlotte and around the country plan to continue having some employees work from home part or full-time.
Use your year-end technology investments to ensure your remote team has all the support they need. Look at things like VoIP headsets and desk sets. You can also consider buying business laptops for remote workers to ensure employees aren’t using their own devices (which could be less powerful and less secure).
If you’ve been waiting to purchase team collaboration software, it’s a good time to do that as well to keep everyone connected.
If you haven’t yet upgraded to a Wi-Fi 6 router, now is a great time. This technology is designed to be faster and handle multiple devices much more efficiently than Wi-Fi 5.
The new Wi-Fi generation also uses more stringent security protocols, which means not only would a network upgrade be faster, it would also be more resistant to hackers.
Get Help Planning Smart Year-End Technology Purchases
Rocky Knoll Technologies can offer the expert guidance you need to make the right decisions for your year-end technology upgrades.
Contact us today to schedule a consultation. Call 704.594.7292 or reach us online.