Special Tax and Financing Incentives Help Businesses Afford Needed IT Investments!

Given the economic quagmire we have endured the last few years, many organizations have deferred investments in new IT systems that could truly help their business. With some of the latest headlines on the economy, it still does not seem like a very good time to make these investments.

However, there is great news for commercial businesses! First of all, recently updated IRS Section 179 tax incentives can significantly reduce the effective capital outlay for computer hardware and software. Secondly, many computer manufacturers are offering extremely attractive financing options, often as low as 0%, to purchase their solutions. In fact, some businesses are finding they can combine these two incentives and realize a positive cash impact the first year they make these needed IT investments!

Only 3 Months Left to Leverage of Special Tax Incentives!

The Section 179 Deduction is a tax incentive that is easy to use, and gives businesses an incentive to invest in capital equipment. Essentially, it allows businesses to deduct the full purchase price of computer hardware and/or software purchased or financed during the tax year. That means that if you buy (or lease) a piece of qualifying equipment, you can deduct the FULL PURCHASE PRICE from your company's gross income.

As a result of the Economic Stimulus Act of 2008, the Tax Relief Act of 2010, and the Jobs Act of 2010, the total deduction available for 2011 has been doubled to $500,000, and the total limit of equipment purchased has been raised to $2,000,000. These are HUGE increases for this year only. Current law reduces these incentives to $125K and $500K, respectively, in 2012.

Section 179 for 2011 at a glance:

• 2011 Deduction Limit - $500,000 (up from $250k previously; will fall to $125K in 2012). For new and used equipment, including new software.
• 2011 Limit on equipment purchases - $2 Million Dollars (up from $800k previously; will fall to $500k in 2012).
• "Bonus" Depreciation - 100% (taken after the $500k deduction limit is reached). Note, bonus depreciation is only for new equipment.

Leasing and Section 179

Be aware that your company can lease or finance equipment and still take full advantage of the Section 179 deductions. In fact, leasing or financing computer hardware and/or software in conjunction with the Section 179 deduction is a preferred financial strategy for many businesses. This approach can significantly help with cash flow.

Capital Lease

The primary benefit of a capital lease is that you can still take full advantage of the Section 179 deduction, yet make smaller payments. With a non-tax capital lease you can acquire and write off up to $500,000 worth of equipment this year without actually spending $500,000 this year. Examples of a capital lease include a "$1 buyout lease" and a "10% Purchase Upon Termination Lease." In many cases the amount you save in taxes will be MORE than the total of your first year's payments.

Equipment Financing

You may also obtain an equipment loan and still take the Section 179 deduction. In fact, many of the largest IT vendors in the world (ie. Cisco, IBM, Lenovo, etc.) offer extremely attractive annual percentage rates – often as low as 0% or low single digits.

The obvious advantage to leasing or financing equipment and then taking the Section 179 deduction is you can deduct the full amount of the equipment, without paying the full amount this year. The amount you save in taxes can actually exceed the payments, making this a very "bottom-line friendly" deduction. And, most importantly, your business gains the boost in productivity, cost reductions, etc. that an investment in new computer systems can provide.

For more information how this approach can benefit your business, please contact your CSP account manager or me at briddick@cspinc.com

Lunch & Learn: Wed. Oct. 12

The new age of telecom is here. Find out how you can reduce costs -- and enhance your business!

Any size business with multiple locations can now cost effectively deploy a centralized, and virtualized IP phone system which will:

• tremendously enhance the productivity of your business
• improve resiliency by redirecting calls in the event of a carrier outage
• provide an outstanding business continuity solution

All attendees will be entered into a drawing for a chance to win a FREE IPAD.

Free Rounds of Golf at NC State's Lonnie Poole Golf Course

The first 100 people to take our 2-minute technology survey will be entered into a drawing for a chance to win one of 16 rounds of golf, or golf lessons, at the Lonnie Poole Golf Course at NCSU.

Take the survey now!

New Managed Services Case Study Available

Through CSP's Managed Services, BCBSNC Credit Union has been able to: 

• Reduce overhead expenses
• Rely on CSP for vital day-to-day IT support
• Avoid network and security issues
• Develop an IT Strategic Plan

Download a pdf of this case study.