November 2020

Unless you’re running a one-man operation, there’s a high possibility that your entire business runs on a server or two. If you’ve been thinking about replacing or upgrading servers or wondering how you can improve your network performance, overall, you’ll want to continue reading.

We all know that computers and other devices have to be upgraded from time to time; however, we often forget about the servers that store our data. They have never been more important than they are now. As more of our daily operations run on servers, the computer is just a device that we use to access our servers.

As we wrap up our series of section 179 tax deduction articles this month, we want to delve into a topic discussed last week: how can you use your tax deductions to your advantage when it comes to upgrading your systems?

Again, as a quick disclaimer, we are not tax experts. Take these articles purely informationally. Before you make any changes based on tax deductions, be sure to consult your company’s CFO or tax professionals.

The Times Are Changing

As technology has increased the usage of servers in our business practices, they play an important role in day-to-day activities. The main function of a server is to store data for a network of computers. With this storage unit, employees can work together, collaborate, and share projects. Whether you are aware of it or not, if you work in an office, it’s highly likely that your work is stored on a server. 

Having a server inside a building that is physically connected to other computers has been the standard for decades. However, in recent years there has been a push to allow people to connect to these servers remotely. The reasons for this vary, but there are typically two main reasons.

One reason is to allow employees to travel, yet have access to their company’s network and projects. We’ve seen this for years, especially for salespeople and executives who’ve had to travel from location to location. This is still a common practice and works well, so it probably won’t change. 

Secondly, people regularly working from a remote location need access to the servers. Recently, there has been a greater push for companies to have more of their employees work remotely. In this case, each remote employee needs to connect to the company’s servers quickly, easily, and without network interruption. 

The people in the first case are only accessing the servers when needed, while people who work from home or small satellite offices work exclusively on these servers every day. A good high-speed connection is crucial in either case. 

With the current worldwide pandemic, remote work tested companies’ servers. Businesses found out quickly if their networks and servers were, literally, up to speed. 

Understanding Your Options

If you’re finding that your server is sluggish or unstable, you have three main options:

Upgrade — This could be a software or hardware upgrade. If you’re set on keeping your current server, adding more ram or memory could make it more functional. This would be the most cost-effective option. 

Replace — While this is the most expensive option of the three, it will end up giving you greater results. Upgrading your system rather than replacing it limits you because of the aged hardware. By replacing your server, the sky’s the limit! You could literally have anything you want and often get a new warranty plan with it as well.

Migrate — This is an option that has become increasingly popular in recent years. With this, you will slowly transition to a cloud-based solution off-site, instead of having a physical server on location. This may be the best option for you if you have an operation that doesn’t demand all that much from the central system. One of the biggest pros of moving to a cloud-based solution is having zero maintenance. After all, there’s nothing physical to maintain. The hosting company and IT professionals take care of all upgrades and software maintenance so you can have peace of mind.

Now Is the Time for Upgrading Servers

Companies will be putting more and more stress on their servers as the working remote trend continues. We’re the first to admit that servers are not cheap, especially ones with the functionality needed to connect large groups of people over large distances. However, you need to make big moves to stay ahead of your competition and maximize productivity.

In addition, there is an available financial benefit to upgrading or replacing your servers now. That’s the key message of this blog — don’t forget about the tax benefits! 

Some companies are continuously looking for ways to write off their profits to avoid paying too much in taxes. Meanwhile, other businesses may have more than enough loss to help them at the end of the tax year. You still have time to make an upgrade this year and take advantage of Tax 179 benefits. If you’re looking at a loss for this year, now is the time to begin planning for an upgrade at the beginning of the year to get an early jump on tax benefits. 

Are you considering upgrading or replacing your servers? Or have you considered moving to a cloud-based solution like a virtual office? Either way, contact us today to see what your best options would be. Even if it would make more fiscal sense to do this next year, it’s never too early to start planning!

We think we’re safe when we say that 2020 has been…less than ideal. After the first quarter, we quickly found ourselves — both professionally and personally — in uncharted waters. But, 2021 is just around the corner and we want to be optimistically prepared.

The continuation of this month’s series of section 179 tax deductions covers how the rapid changes of 2020 can actually benefit your 2021. The good news is that this is actually good news!

As a disclaimer, be aware that we are not tax professionals and this article should only be viewed as informational. Before making any changes related to your company’s taxes, consult with your company’s CFO or other tax professionals.

Overcoming 2020 – The Worst Crown Ever

Who would have thought this time last year that the entire world would be crippled by a tiny little organism? COVID-19 changed everything overnight. For the most part, those changes were devastating. Of course, hundreds of thousands of people have already lost their lives by the time of this writing. Many businesses have also shut their doors or drastically cut back operations.

What seemed like temporary changes (such as sending your employees home to work) soon became the new normal. Businesses like Zoom became overnight successes because of the change in the landscape. We don’t know what will happen with COVID-19 in the coming months or years. We believe, though, a lot of these changes are probably here to stay. So, your company may as well make the most out of it.

Prepare for 2021: Be Smart About Deductions

Most companies had to make changes besides simply sending employees home. Perhaps they had to change or upgrade software, purchased equipment for employees to use remotely, or simply had to downsize. These are all examples of things that can be written off at the end of the tax year.

As a refresher from our last article, the more you spend, the more you save. Even though you may have shelled out more than originally budgeted to accommodate for 2020 challenges, at least you can avoid paying tax on those expenses. What are some examples of changes in the last year you can get some benefit from?

Maybe you found that your company needed more mobile hardware to address a more mobile workforce. Write-off.

Perhaps you moved office space as the decreased workforce (either from layoffs or employees working from home) didn’t justify your former space. Write-off.

Even better, maybe you took our advice and decided to migrate to a hosted environment or virtual office. First of all, thanks for listening! Second, write-off.

If you haven’t done any of this, you still have two months to upgrade your business operations. While these deductions don’t make the upgrades free, they do make the decision much less painful in the short term. Then, the upgrades themselves make it worth it in the long term.

Prepare for 2021: Don’t Just Sit There

If you’re reading this article right now, we congratulate you on surviving in an extremely difficult environment. If you want to remain in business and even grow in the coming years, it’s time to make some upgrades. Now is the best time, as well, while you can utilize the benefits of tax write-offs.

One of these changes is the aforementioned virtual office. It essentially involves creating a virtual workspace where employees can log in and do any of the sorts of work that they would do in a physical office. The primary benefit of a virtual office is allowing your company to be flexible; giving you the option to have employees anywhere in the world and yet still be productive.

This virtual office setting not only stores data like in a traditional cloud solution, but it includes all software and line of business applications to facilitate full productivity. When administered by an experienced company such as ourselves, you end up having a very lean yet safe solution.

If you want to see how your company can get itself in a leadership position in this new climate, contact us and see how we can help put your section 179 tax deductions to work for you!

Regardless of your line of work, all businesses have one common goal in mind: to generate revenue. Of course, we all want to make a difference in the world and have satisfaction from hard work. However, if you’re not earning more than your spending, you need to make some changes. While large black numbers at the end of the year put a smile on your face, the tax bill that comes along with them usually wipes it right off. Thankfully, there are ways around giving up all of your hard-earned profits to Uncle Sam. Relief can come in the form of section 179 deductions. But what are these and how can you legally use them to write off technology purchases and maximize your company’s profits?

In our series of blogs for the month,  we will be discussing just that. Before we get too deep into the weeds, know that we’re not tax professionals, and these articles are purely informational. If you want specifics as to how Section 179 deductions can work for you, please consult accounting professionals.

Time to find a Write-Off?

 Everyone loves to talk about write-offs, though few people actually understand the specifics around them. Basically, a write-off involves reporting a business expense to the IRS to avoid taxation on the money used to pay for it.

Write-offs seem great for a business owner or manager. Though, in practice, you have to be very careful to avoid trouble with the IRS. After all, you can be sure that they will be scrutinizing any revenue they lose. You’ve probably heard of people who went a little write off crazy in the past now find themselves with 3 square meals a day for free in federal prison!

Can You Write Off Technology Purchases? 

How do you know exactly what to write off and how does this apply to technology? Basically, you can categorize business write-offs into six forms:

Business Personal Property

This includes just about anything that could move from your business base. These can range from office supplies (like pens and staplers) to electronics or even heavy equipment like forklifts. If it is relatively easy to move from one location to another, then it’s considered business personal property. Often technology upgrades will fall into this category, so you can write off technology purchases. They could include new desktops, laptops, servers, or converting everything to the cloud.

Office equipment

This category covers larger objects that you cannot easily move. For example, you can think about larger printers, medical diagnostic machinery, etc. If not covered under business personal property, you can write off technology purchases, here.

Machinery

This is really a category for anything else that produces for your company. Examples in this category might include industrial machinery that you couldn’t just put on the back of a pickup truck. These would usually include the sorts of large machines that you would find in a factory or business like that.

Business vehicles

This is a category that could get someone in trouble quickly. A vehicle, such as a car or truck, purchased by the company and only used for company purposes at any given time falls into this category. Sometimes, a vehicle is used for a combination of work or personal purposes. If that’s the case,  report the percentage of the time the vehicle is used for business versus personal trips.

Property

This includes any buildings or land that your company owns and is used exclusively for business purposes.

Capital improvements

By definition, capital improvement is a structural change or restoration of property that will enhance its value, prolong its useful life, or adapt it to new uses. This does not include any sort of work you do to a property. For instance, the addition of an air conditioner or furnace could be considered capital improvement while doing interior decoration is not. New cable runs to enhance Internet access to your building may also fall into this category.

Tax Write-offs Are Income!

For many of us, tax returns are a bonus. Perhaps if you get one, you take that money to go by a new television or go on vacation. However you use it, most of us consider tax returns a little bonus, not something in our personal budgets.

This should not be the case with businesses. Section 179 deductions are not bonuses, but rather strategic ways of not paying too much in tax. One of the reasons that good tax people are worth their weight in gold is they save your company from paying too much in taxes.

A good company will factor in write-offs when making their budgets and factoring quarterly and yearly profits. For some companies, particularly small companies, those write-offs might be a large portion, if not the entirety, of their profits for the year!

Write off Technology Purchases to Plan for the Future

While many write-offs are incidental or just factoring in day to day business expenses, planning well can make a huge difference in future projects. For example, if you’re in the black more than you anticipated this year, take the opportunity to refresh your technology, consider moving to the cloud, implementing virtual office space, or making server upgrades. By doing something like this, you can make sure that you are benefitting your business while still turning a profit.

The IRS put section 179 in the tax code for the purpose of letting businesses do business without punishing them to death with taxes. They know that if there is an incentive for companies to spend, it will work out well for everybody in the end. So, don’t be afraid to make investments before this crazy year comes to an end. If you need help to strategize your next project, just reach out to us.