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A Guide to Section 179 for Small Business Owners

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It’s never too early to focus on upcoming taxes. Naturally, small businesses want to maximize their deductions to minimize taxes. However, they might not be aware of a certain tax code that benefits them: Section 179. According to a survey conducted by the National Federation of Independent Business (NFIB), only 65 percent of small business owners realize they might be eligible for Section 179. If you’re a bit unfamiliar with Section 179 or what qualifies under it, this guide can help you take advantage of applicable deductions to solidify a strong growth for the future.

The basics of Section 179

Section 179 applies to deductions for business depreciation of property. It won’t increase the overall deduction you can take, but it gives small businesses an option to take their deduction more quickly. In some cases, an asset’s useful life could stretch out over a maximum of 39 years. With Section 179, a company has the option to declare the entire deduction in one year instead of spreading it out over many years.

For example, let’s say a restaurant purchases a $5,000 appliance:

  • If the useful life of the appliance is five years, straight-line depreciation would cause the business to only deduct a portion of this expense each year for five years.
  • Under Section 179, the restaurant could deduct the entire expense in the first year.

Newer small businesses that have to invest in a lot of assets right away can take advantage of the deduction right away. It can also help established businesses make decisions about purchasing new assets that could help their company grow. Even though the purchase may cause the business to spend a lot up front, the tax impact might help ease the burden initially.

Currently, there is a deduction limit of $500,000 and a total investment limit of $2 million. These limits are indexed to inflation, so they could change somewhat in the coming years.

What Section 179 means for your small business

Many small business owners are generally familiar with some of the small business tax deductions that can help you save money at tax time, but did you know about Section 179?

This tax deduction expands to a deduction limit of $500,000 level and is permanently at this level until further notice. This tax break for small businesses is intended to make it more affordable for small companies to buy business equipment, such as office furniture, vehicles, computers, machinery and other tangible capital investments, by allowing businesses to deduct up to $500,000 per year in qualifying business equipment purchases from their taxable income.

Section 179 has been around for several years, but the levels and availability of this tax deduction had been fluctuating. When it was first introduced, Section 179 deductions had an annual limit of just $10,000. Congress kept raising the limit year after year, but then in January 2015, the limit dropped from $500,000 to $25,000. However, the Protecting Americans from Tax Hikes Act of 2015 (PATH Act) allowed the return of the $500,000 limit to help resolve any uncertainty about the rules for this type of small business tax deduction.

While businesses were already allowed to deduct the value of eligible business equipment purchases, they could only deduct a portion of the purchase’s value each year. However, under Section 179, your small business can deduct the full value of certain business equipment purchases in the same tax year that the purchases are made. This alleviates the pain of depreciating (or deducting the amount in portions) on a year-by-year basis over the useful lifetime of the equipment.

This advantage can be huge for your small business, as it can potentially reduce your taxes by larger amounts each year. No more waiting several years to get those full tax benefits of your equipment purchases!

Section 179 in 2016

To show how much Section 179 benefits small business, NFIB conducted a survey to its members. In NFIB’s survey, small business owners were asked how Section 179 helped their growth and progress. Here’s what NFIB found from survey-participating NFIB members:

  • 78 percent of small businesses used Section 179 to offset their tax expenses.
  • 82 percent purchased equipment or software last year (cars, trucks, office furniture, machinery, etc.).
  • 35 percent of small business owners are unaware that they’re eligible for deductions under Section 179.
  • The top three purchases made were computers (51 percent), vehicles (44 percent) and office furniture (31 percent).
  • 75 percent made qualifying purchases of less than $50,000.

What you need to know about Section 179

  • Section 179 has a $500,000 limit on the total amount of business property expenses that can be deducted per year.
  • Section 179 can only be used for new or used property that is purchased by your business – not for leased or rented property or property that is received as a gift or inheritance.
  • Section 179 deductions can only be used for property that is primarily used for business. You must use the property for business more than half of the time, and the amount of your deduction is reduced by the percentage of your personal use.
  • This deduction is highly focused on small and medium-sized businesses because the only companies that qualify for Section 179 are ones that spend less than $2 million per year on qualifying business equipment purchases.
  • Starting in 2016, Section 179’s $500,000 annual deduction limit and $2 million business investment limit will be indexed for inflation – so the number of deductions will continue to adjust slightly each year along with overall prices in the economy.

Which kind of property qualifies for Section 179?

Section 179 deductions can be used for tangible personal property purchased for your business that the IRS has determined will last more than one year. The types of property include:

  • Computers
  • Software
  • Office furniture
  • Business equipment
  • Machinery
  • Business vehicles (weighing more than 6,000 pounds)

You can also apply this rule to new or used property that you purchase from another party. Any property you purchase for your small business must be used at least 50 percent of the time for business. For example, let’s say you purchase a new computer for your design firm. You must use it primarily for your business to qualify. If you find yourself using it to check personal emails from time-to-time, it won’t be disqualified. Just ensure you use it mostly for business-related issues.

However, let’s say you purchase a vehicle that you’re purchasing for both business and personal use. You should document how much you spend using it on each to confirm if it qualifies. If you use it for business less than half of the time, it doesn’t. The following are some examples of things that you cannot do and qualify for the deduction:

  • Any property you might inherit, obtain from an organization you control or can purchase from a relative
  • Any personal property converted to business property that is used less than 50 percent of the time on business needs
  • Land and permanent structures
  • Furnaces or air conditioning units
  • Any property meant for use outside of the U.S.
  • Intangible property such at copyrights or patents

If you’re still unsure if your equipment qualifies, visit the official Section 179 informational website.

Are you ready to file your small business taxes?

If you run a small business, you can also use software to help prepare your own taxes. In other cases, it may be best to hire a tax professional to help you make sure that you don’t have problems and ensure that you take advantage of all of the applicable business deductions.

If you have to file an extension, you still have to pay what you owe on time. Otherwise, you could face steep penalties. In certain situations, you may also consider looking into funding to help you cover an extension or any other tax bills. If you’re still unsure of how Section 179 can benefit your small business taxes, check out this webinar by NFIB for more information.

Tax rules can impact major business decisions. As a small business owner, you should make researching these rules part of your job or do due diligence to find a tax professional who can assist you. Prioritizing your small business taxes will not only prevent unexpected expenses but can help you more efficiently and effectively run your business year-round.

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Top 5 B2B Sales Tips To Make It Big

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If you are in B2B sales, you may have seen your prospects never again care to talk with you through telephone or email. Why? Since they never still require your assistance to settle on an acquiring choice. The web is here now to enable them to do their examination.

All in all, what’s a B2B salesman expected to do? In the event that your prospects are quietly investigating your business how would you finalise the negotiations? You should never again be the ace of complaint taking care of and shutting. In B2B offering it’s the relationship you need to win to start with, and you may need to realise totally new possibilities to succeed.

Be Helpful

60% of a purchaser’s choice is made before they will formally contact a business agent. If you need to interface with them prior in their “voyage” (which is exceptionally fitting since it will make the arrangement less demanding to close), you can’t begin off with a business discussion. Instead, you need to be an asset and help the purchaser comprehend entirely their test or chance to be tended to. They will discuss side effects, and you can share what you’ve seen or experienced in their industry. This causes you increase put stock in counsel status and can set you up for referrals.

Qualify Your Leads

In the 2012 Marketing Benchmark report, Marketing Sherpa found upwards of 61 percent of B2B advertisers sent prompts sales representatives with no capability. This implies a considerable measure of time is squandered by sales representatives composing messages and making telephone calls. Chilly calling or even cold calling is essentially purposeless unless you apply procedure #4.

Rather you ought to have a recorded portrayal of a deals qualified lead. Rundown the markers that say a lead is deals prepared. A strong showcasing framework can send you great leads, however just if the framework comprehends what you are searching for. In the event that you don’t have organised advertising support, utilise methodology #1. You’ll never pitch to another unfit lead again.

Discuss Results, Not Product

It’s one thing to be a specialist in what you are offering; it’s something else entirely to transfer the estimation of an administration or item to a potential purchaser. In B2B the main issue is the thing that truly matters. You need to comprehend their objectives, difficulties, plans, and course of events with a specific end goal to position your administrations as an answer. Much of the time an examination arrange in your business procedure is essential to show how far the prospect is off in their the present state of affairs. Utilise a confirmation based attempt to sell something and manufacture a case for what’s conceivable in their association.

Have Great Follow-up

On the off chance that you do what you say and development, you’ll let the big dog eat. It must be expert through teaching, utilising a procedure, and the help of innovation. On the off chance that you aren’t employing a client relationship administration framework (CRM), at that point get one. It’s necessary for following discussions and setting up updates for yourself to make a move.

In the event that the planning isn’t right for your prospect, inspire authorisation to development. Utilise date-book solicitations for gatherings to guarantee they aren’t overlooked. Send follow-up messages the day of the discussion. Continuously be watchful for a supportive blog entry or digital book that you can send their approach to keep up your counsel status.

Interested enough? For more such updates, subscribe to The Business Column today!

 

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Top 5 Business Books To Read This Year

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Reading is outstanding amongst other approaches to open our brains to various thoughts and points of view. There is so much information that exists on the planet. Individuals have devoted their whole lives towards specific encounters or kinds of work.

We can’t catch the more significant part of their learnings from a couple of hundred pages. However, we can increase massive understanding of what they realised and experienced. It is for reasons like this that there is a high connection between’s prosperity (individual and money related) and perusing.

So, there is a culture that has created around perusing for perusing. Individuals boast about what number of books they have examined. It influences us to appear to be more refined and wise. This has additionally led individuals to attempt and read books that are good examples have perused.

The Culture Code: The Secrets of Highly Successful Groups

Dan ought to be viewed as the Stephen King of viable, helpful in normal daily existence (rather than “that was intriguing, yet what do I do with it?) right to life. All that he composes is gold.

The Culture Code is no particular case. Dan went inside fantastically fruitful associations like the San Antonio Spurs, Pixar, and SEAL Team Six to reveal three essential aptitudes that clarify how different gatherings figure out how to work with an individual personality. He demonstrates that incredible groups don’t only have that exceptional “something” – they have pioneers who deliberately incorporate them into something awesome.

Brave Leadership: Unleash Your Most Confident, Powerful, and Authentic Self to Get the Results You Need

Leading – genuinely doing it – is hard. Furthermore, scaring. Also, upsetting. That is the reason such a large number of individuals receive a type of authority persona, in actuality acting like we figure pioneers ought to work.

In any case, on or off the chance that you need to be an extraordinary pioneer, you need the strength to act naturally. Kimberly demonstrates to you industry standards to the interface, to be truly powerful, and how to genuinely lead individuals to get the outcomes you – and they – require.

The CEO Next Door: The 4 Behaviors That Transform Ordinary People into World-Class Leaders

Botelho and Powell filtered through a large measure of information to reveal what makes an excellent CEO.

Incidentally, while the standard speculates like instruction and associations are critical, what truly matters is that incredible CEOs are unequivocal, stable, convey what they guarantee no matter what, intensely adjust to evolving conditions, and connect with partners without staying away from strife. ​

Also, surprisingly numerous have flopped en route – once in a while in a considerable manner.

The Motivation Myth: How High Achievers Really Set Themselves Up to Win

On the off chance that you need to achieve something meaningful – or notwithstanding something little – and have been sitting tight for inspiration to strike, this book is for you. Motivation isn’t something you get – inspiration is something you make, all alone, by following a procedure that enables you to enhance, a little bit at a time.

That implies you as of now have everything inside you that you have to accomplish your objectives. You merely require a procedure ensured to enable you to appreciate those little triumphs, so you get small, relentless measurements of inspiration consistently along your excursion to progress – and in addition to turning into whatever it is you would like to become into.

All set to work more? Subscribe to The Business Column today!

Inspired by the article at Inc Magazine.

Disclaimer: All images are sourced from the web. No copyright infringement intended.

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Top 6 Tips For First Time Entrepreneurs

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Have you started walking down the entrepreneurial journey? Has it all just begun, and facing the troubles? Or is everything going happy and gay?

As first time entrepreneurs, things would be crazy out there. To help you with it, here’s a set of 6 tips that would help you bunch of first time entrepreneurs!

Focus.

Some first-time business people want to seize each “opportunity” they go over. Openings are regularly deceivers. Abstain from getting derailed. Juggling various endeavours will spread you thin and confine both your viability and efficiency. Complete one thing superbly, not ten items inadequately. If you want to bounce onto another task, that may mean something about your unique idea.

Do what you know.

Try not to begin a business primarily because it appears to be provocative or gloats substantial speculative net revenues and returns. Do what you adore. Organisations worked on your qualities and gifts will have a more prominent possibility of progress. It’s not just critical to do profitable business; it’s additionally essential that you’re glad overseeing and developing it all the live long day. If your heart isn’t in it, you won’t be effective.

Have the Startup vibe

Disregard extravagant workplaces, fast cars and fat cost accounts. Your wallet is your organisation’s life-blood. Practice and ideal the craft of being thrifty. Watch each dollar and triple-check each cost. Keep up a low overhead and deal with your income viably.

Focus On Self, Funds Will Follow

Nobody will put resources into you. If you require large aggregates of funding to dispatch your wander, backpedal to the planning phase. Locate a beginning stage rather than an end point. Scale down expensive plans and bombastic consumptions. Improve the thought until it’s sensible as a beginning time wander. Discover approaches to demonstrate your plan of action on a shoestring spending plan. Show your value before looking for speculation. If your idea is valid, your odds of raising capital from financial specialists will drastically move forward.

Don’t fall victim to your Blabbering

Try not to talk the discussion unless you can walk the walk. Inspire with activity not discussion. Embrace your business excitedly, yet elegantly. Abstain from overstating realities and touting sweeping objectives as convictions. To put it plainly, set up or quiets down.

Know when to Quit

As opposed to conventional thinking, a shrewd chief does not run down with the ship. Try not to go on a waste of time for self-image. Know when it’s an ideal opportunity to leave. On the off chance that your thought doesn’t work out, consider what turned out badly and the errors that were made. Evaluate what you would have done another way. Decide how you will use these hard-educated lessons to better yourself and your future entrepreneurial undertakings. Disappointment is unavoidable, yet a genuine business person will beat affliction.

Has this got you inspired? Read more on The Business Column today! Subscribe and Share!

Disclaimer: All images are sourced from the web. No copyright infringement intended.

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