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By Debbie Gregory.

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Every small business wants to minimize their taxes and maximize their deductions. However, many small business owners miss out on a tax code that can benefit them, U.S. Tax Code Section 179.

 

According to a recent survey conducted by the National Federation of Independent Business (NFIB), Section 179 has helped small business growth and prosper:

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

 

What is Section 179?

Section 179 refers to property depreciation deductions a business can claim. It does not increase your overall deduction but it can give you the option to take the deduction more quickly. In other words, you can declare the entire deduction in a single year instead of spreading it over many years.

 

An asset’s useful life depreciation deduction can be stretched out to a maximum of 39 years but most are taken over a 5 year period. Under Section 179, you can deduct the entire expense in the first year.

 

This can be especially helpful if the company needs the asset to grow and the item purchased was quite expensive up front. The tax impact can help ease the burden and help the company grow. Currently, the deduction is limited to $1 million and a total investment limit of $2.5 million.

 

How Can This Help Your Business?

Section 179 can be used for most tangible assets purchased to run your business. This tax break is intended to make it more affordable for small businesses to buy expensive equipment including:

  • Machinery
  • Computers
  • Computer software
  • Other business equipment
  • Company vehicles
  • Office furniture
  • Capital investments
  • Property
  • And more

While a business has always been able to deduct expenses of this nature, they could only deduct a portion of the asset’s value every year. With Section 179 the full value can be deducted in the same year that the purchase was made.

 

Where Can I Obtain More Information About Section 179?

If you have any questions about Section 179, visit the official Section 179 informational website at http://www.section179.org/. If you are looking to learn about other potential tax breaks for you or your business, you can always visit the IRS’ website at https://www.irs.gov/ to learn more.

 

Our Advice

The US tax rules are constantly changing, it is always best to pay attention to taxes all year long and not only at tax time.  Keep alert for changes in tax laws and always consult a professional for help.

 

Disclaimer

We are not tax professionals and we strongly recommend that before you take any actions, that you consult your own licensed tax professional. It is always best to seek professional assistance if you have questions about taxes or their s on your specific business. Working with a professional also provides you better opportunities to find and take advantage of legitimate tax breaks and opportunities to lower the amount of taxes that you pay.

By Debbie Gregory

Veterans are uniquely qualified to secure government contracts due to the skills and experience they obtained during their military careers. Every year, the federal government spends approximately $500 billion on goods and services.  To maintain a level playing field, the Small Business Administration (SBA) works with federal agencies to ensure that at least 23% of all prime government contracts are awarded to small businesses. These are called “set- asides.”

For Service-Disabled Veteran-Owned Small Businesses (SDVOSB), set-aside contracts can present outstanding opportunities.

There are two types of set-aside contracts: competitive set-asides and sole-source set-asides. With competitive set-asides, at least two small businesses may perform the work or provide the products being purchased, the government sets aside the contract exclusively for small businesses. With few exceptions, this happens automatically for all government contracts under $150,000.

Sole-source contracts are the type of contract that may be issued without a competitive bidding process. This usually happens in situations when only a single business can fulfill the requirements of a specific contract.

Pursuant to the SBA website, In order to qualify for the disabled veterans’ business program, your business must:

  • Be a small business
  • Be at least 51% owned and controlled by one or more service-disabled veterans
  • Have one or more service-disabled veterans manage day-to-day operations and also make long-term decisions
  • Eligible veterans must have a service-connected disability

The certification process varies depending on the SBA contracting program. In some cases, you may self-represent your business to the federal government as being owned by a service-disabled veteran.  You need to update the socio-economic status section of your business profile at in the System for Award Management (SAM) at http:www.sam.gov.

The VA sets aside contracts for veterans through their Veterans First Contracting Program. Their program is not the same as the SBA’s program. To obtain access to set-aside Veterans Affairs contracts, your business must be verified through the Vets First Verification Program at https://www.va.gov/osdbu/verification/

Veteran and Military Business Owners Association, VAMBOA,

 

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