End of Year Copier Leases Cut the Bottom Line for Small Businesses
2016 is coming to an end sooner than you imagined possible. The tax man cometh right along with the Bells ringing in a new year. So, now is a good time for you to take a look at your office equipment and furnishings and evaluate whether you should lease or purchase new gear.
The copier is first to mind. It’s undoubtedly something you can’t do without, because it scans, does most or perhaps all of your printing and is good for copying too. On the other hand, copiers are rather costly items, unless you just have a home office style. Now, lets take a look at that copier in terms of a lease and see how it might cut the bottom line.
That is, after all what tax preparation is about. At least in part, you want to reduce your federal tax liability wherever you can and that’s smart. On the other hand, its difficult to reduce your income without giving it away.
IRS 179 deduction can make a good year an even Better One – Copier Leases Cut the Bottom Line IRS Bill
After reviewing, you’ve had a profitable year and see that tax man coming at you. Well, there may still be time to get in on some good tax deductions if you have the need.
Here’s how this might be the break you were looking for, while upgrading your office at the same time. Suppose you select a brand new end of year copier. Lets see. It prints, scans, copies and faxes, plus it can print jobs from your mobile devices. If that sounds appealing to you, you’re going to like this even better.
The Internal Revenue Service allows for a small business to expense, or write off the entire qualified purchase in the first year of service. Naturally, there are some caveats to this, but unless you’ve spent a ton of money on capital equipment and vehicles already – you could win big here.
It’s important to Know that end of year copier leases are treated just like an installment purchase for Tax Purposes
Most people are under the assumption that a lease is treated differently that a purchase, but it just isn’t true. In short, its because a copier lease is a capital lease or financial lease, not an operating lease. That’s because it is a fully amortizing lease. Furthermore, that means the value of the equipment is used up in the lease. It can get rather involved, but if you want to know more about it, I urge you to read explanations and definitions at The Lessees Advocate site, written by yours truly.
IMPORTANT: Section 179 for Current 2016 Tax Year (This Year)
Section 179 can provide you with significant tax relief for this 2016 tax year, but equipment and software must be financed and in place by midnight December 31, 2016. Use this 2016 Section 179 Calculator to see how much the Section 179 tax deduction can save your company.
This quote is taken directly from section 179.org. It would be wise to contact your tax preparer or a friendly CPA. You may really cash in on a tax benefit that is going away.
What I learned about Section 179 that makes me want to share with you
I bought a brand new vehicle in September, 2016 for my company, Digicor, inc. The qualifying facts of my brand new Ford Transit 250 is that it is not a passenger van, it is a cargo van intended and used for business, it has a gross vehicle weight in excess of 6,000 lbs and I bought it through my company. It makes no difference that I bought it cash outright.
The fact is, I can expense the entire cost of the vehicle in the year I placed it in service. That is, I can write off the $19500.00 I paid, which includes the cost of the vehicle minus my trade in which was a company asset that had not been fully depreciated. I’m not going to go into the cost basis calculation of the trade in, but suffice it to say that what I put out of pocket is about what I can write off. How awesome is that!
Even if You only get a 179 deduction for 50% and depreciate the rest, you’re really winning big
To show you how end of year copier leases cut the bottom line, lets do some calculations. Lets assume the copier lease (value) is $10,000. Let’s assume a 5 year lease at our rate I know to be right. So your payment is $197.00. Let’s say you leased the equipment in November and paid out two payments plus documentation fees of $90.00 and Florida doc Stamps on the note of say $70.00 (Florida law). That means you would have paid out $554.00 in the year you put it into service, 2016.
Here’s the good part. Lets presume you pay 32% taxes. It may be more depending on if you pay yourself a salary and thus, self employment tax and fica, medicare x two. But, lets stick with a conservative 32%.
If you only expensed 50% as a section 179 bonus, you would get an expense writeoff of $5000.00 which is half of our hypothetical value. Now, apply your tax bracket of 32% and you have reduced your taxes by $1600. That’s far more than you spent this year on the lease.
Summary -End of Year Copier Leases Cut the Bottom Line for Small Businesses
Whether you need a new copier, laser printers or computers for your business, you can take advantage of IRS section 179 deduction. This is no secret and any good tax man can advise you appropriately. The fact is, this is one perk that is destined to go away. So, now is the time to act, it appears.
Digicor, Inc. can help you make this happen for 2016. We have all of the equipment and services you need for excellence in copying, printing and scanning in Tampa Bay.
Call one of our professionals and ask for us to help you with your business’ needs. We will be most happy to put together a custom end of year copier lease to cut your bottom line and keep more money in your pocket.