Combine PPP loans and Section 179 tax breaks for your end-of-year upgrades
It is hard to believe, with everything this pandemic has handed to the business world in the past 6 months, that we have made it to the third quarter of the year and 2020 is finally nearing its end.
If this past year has taught us anything, it is that we must plan for the unforeseen and remain fluid enough to pivot our business models when potential problems arise.
We can’t foresee what the year 2021 will provide for us. But we can use what we have learned in 2020 to prepare for what may come next year.
Now is the time to plan for the technological needs of our businesses. We can use what we have learned to better prepare for the storms that may lie ahead.
Plan now to avoid delays and downtime
The effects of the Covid 19 pandemic are still trickling through the economy. While most businesses have reopened in some form, and employees have returned to work in large numbers, the effects of having been shut down for several months are becoming apparent.
The stores of materials, goods and equipment used by the business sector have dwindled. Right now, supplies are low and demand is high.
Just like the paper shortages that left people scrambling for cleaning products back in April of 2020, the tech industry is now facing shortages that are leading to delays in the production of office equipment and hardware.
What does this mean for you?
It means that it is now taking longer to receive the hardware, software and office equipment you need to upgrade your office equipment. Where once it took only three to five days to receive a shipment of laptops, it is now taking two weeks to a month.
If you are thinking about replacing your computer hardware, don’t delay until something breaks. Keep in mind there is now added downtime while suppliers work to produce the hardware you need.
Having an assessment performed on your current equipment is the key to being prepared for the next business crisis. A planned upgrade means your business is prepared to stay up and running and gives you the time you need to receive the hardware before there is a crisis or breakdown.
In that attitude of preparation, we have two tools at our disposal right now: The PPP loans that continue to be available for small businesses and tax breaks associated with Section 179 of the tax code.
What is Section 179?
Section 179 of the tax code was put in place to help small businesses invest in themselves. The code allows business to upgrade business equipment and deduct the full purchase price of qualifying equipment purchased or financed during the year.
This means that buying or leasing equipment now, before the year ends, will allow you to deduct the full purchase price on this year’s taxes.
According to the IRS website, this is one of the few government incentives available to small businesses that result in real tax benefits for small business owners. As of January 2020, the limit for the 179 Deduction is $1,040,000.
This means that companies can deduct the full price of qualified equipment purchases up to $1,040,000.
Combine Section 179 with funding from your PPP loans
Section 179 is a boon in any year, but with funding available from the Paycheck Protection Program, small businesses can turn those dollars into an investment in infrastructure and still receive the Section 179 tax deduction on top of it.
For employers who received funds in Phase II of the PPP program, 60% of the money needed to be used for payroll in order to be fully forgiven. According to the PPP guidelines, 40% of the funds could then be utilized for other expenses, and the time period for using the funds extends to year end.
The PPP guidelines state that any funds not used to keep employees on the payroll would then be considered as a loan and charged a small rate of 1%. A loan at this rate is a boon for small businesses everywhere.
Recipients have until December 31st to use the funds with a loan maturity of 1% for 2 to 5 years. You can read more about PPP loan forgiveness and uses from the Small Business Administration.
We have all experienced first-hand what unplanned downtime can do to our businesses.
Don’t wait for it to happen again. At Helping Hand IT, we can provide you with an assessment of your current hardware and software, review your data backup system, secure your remote and in-office networks and provide you with a plan that will help keep you running when the next emergency strikes.