All sizes of businesses are eligible to take a Section 179 deduction at any time of the year. This provision of the IRS tax law can assist in reducing the cost of leasing or making business-related purchases. The IRS offers this choice to businesses as a way to encourage them to spend money on equipment or property that qualifies but would otherwise be prohibitively expensive.
In this blog article, we’ll offer advice on how businesses just like yours have leveraged the Section 179 deduction to lower the cost of buying or leasing enterprise applications like NetSuite ERP.
Keep in mind that the terms are subject to change each year, often without prior warning in the middle of the year.
The Section 179 deduction is what.
The ability for businesses to write off the whole cost of real estate or office equipment without paying the full amount at the time of purchase is a typical provision of the IRS tax code.
You can purchase or lease qualified property using financing or leasing, use it right away, and then deduct the entire cost from your taxes.
It must, however, be bought and utilized in the tax year for which it is being claimed.
Therefore, businesses can deduct the depreciation of a purchase or lease within the year it was made and put to use rather than spreading it out over a number of years.
Therefore, rather than waiting, you may make the purchase or lease NOW and save a lot of money on taxes, thanks to the deduction.
Important facts quickly for 2022
- Between January 1, 2022, and December 31, 2022, equipment must be bought, financed, or leased and used.
- There is a $1,080,000 deduction cap in 2022.
- The $2,700,000 spending limit for equipment purchases in 2022
- For 2022, bonus depreciation is 100%.
Once more, these will alter yearly and occasionally even mid-year. Do your research by getting in touch with a tax or accounting expert.
How do NetSuite and other business applications qualify?
Business software like NetSuite and others qualify as “off-the-shelf computer software.” According to the IRS, it is as follows.
“This is computer software that is easily accessible to the general public, covered by a nonexclusive license, and that has not undergone significant modification. It encompasses any program created to make a computer carry out a specific task. However, unless it is in the public domain and necessary for the operation of the software that otherwise qualifies, a database or comparable object is not regarded as computer software.
In accordance with the website Section179.org, there are a few more needs.
- It must be bought or financed through a particular acceptable lease or loan.
- It must be employed in your firm to generate revenue
- It must have known useful life
- It must be anticipated to last for more than a year.
What if financing is required rather than outright purchase?
That is acceptable and can even be more profitable for your business. How?
Combining funded equipment with the Section 179 deduction makes this possible. Businesses can write off the entire cost of a purchase even if they don’t pay it in the year it was made.
As a result, you will only need to pay for NetSuite monthly and will be given a tax credit for the full cost of your purchase.
Because of this, the tax advantages of this combination are frequently significant enough to offset your cash outlay for the year.
There are benefits to leasing “off-the-shelf computer software” as well. That is covered farther down.
Through our strategic partners, Seibert Consulting Group provides financing solutions for NetSuite users.
We are able to provide application-only financing up to $500k without the need for financial statements.
Financing statements are needed for amounts over $500k; however, the procedure is expedited.
The full cost of the project, including hardware, software, implementation, training, and third-party vendors, is covered by financing.
We can reduce a large software purchase into a small monthly payment with the aid of our partners. And NetSuite’s top-notch ERP and other modules will be enhanced for your business. For information about the cost of NetSuite, go here.
What about leasing?
Financing and leasing both have advantages; however, leasing has different conditions. ASC 842 has altered how leases are recorded and reported; therefore, businesses need to be aware of it. The term of the lease can have an impact on financial results and how leases are structured. Using a non-taxable capital lease is a well-liked method of benefiting from the Section 179 deduction.
Next step
Taking Your Business to the next step can only come to reality if you have the right expertise to deliver outstanding solutions. At Seibert Consulting Group, we specialize in delivering modern solutions to businesses that aim at taking full advantage of the eCommerce platform. We always customize our solutions to align with Your Business’ requirements and goals. Let’s start talking about your project and find out how we can help Your Business grow. Get in touch with us via our chatbot or email at hello@seibertconsulting.com and via our direct line at 760-205-5440.
