If your store will be owing taxes this year time to spend money and
tax a big tax deduction
If you buy a $200 printer you can write it off as a computer or
office expense and lower your taxable income by $200.
But in the past if you bought a $10,000 piece of machinery or
several computers you could not write them off. The government would
allow you to only write off about 20% of it each year over 5 years.
So you could write off $2000 this year and lower taxes by $2000 even
though you bought ten grand.
This is called section 179 of the tax code. Current law allows
businesses to deduct up to $500,000 in accelerated depreciation; the
amount is scheduled to drop to $25,000 in 2014,
Rick Segal is a retail consultant and his email today describes this
You should give your accountant a 5 minute call but here's what I'd
suggest for you.
If you do NOT own a laser welder in your store BUY ONE even you have
only one jeweler. It will make 75% of your work go faster and takes
less expertise to do tough work than with a torch.
The things that go slower with a laser (ring sizing and such) then
you charge 50% more for the labor per our book.
A laser welder does NOT cost $25,000 it costs you about $350 a month
with a lease or loan. That's cheap to enhance your bench work and fix
things you could never fix before.
If you buy the laser before the end of the year you get to deduct
all of it and lower your taxable income by the approximately $25,000
on the invoice even though you'll only spend $350 a month over 5
years. if you have a net taxable income of $100,000 you'll then
reduce that to $75,000.
If corporate income tax is 25% this could save you in taxes $6250.
That would pay for 17 months on the laser lease.
Buy and get invoiced for it this year even if because of the season
you want to take delivery in January.
Same thing goes for your old computers. if you have Windows Xp,
upgrade to Windows 8! Its faster and more reliable. Don't worry about
the look and tiles. After getting the computers go to this website
and for $5 buy a start button. Will look like Windows 7 or even like
Windows xp. Just "Google" "Stardock" and look for upper left hand
corner "Software"then"Individuals" and choose further down "Start 8".
So order the computers and monitors, get an invoice and/or pay for
them this year and have them installed in January when the season is
This will lower your taxes and you can pay for it over time. With a
lease, loan or put on the credit card. But again give a 5 minute call
to your accountant but this would be a great thing for your store and
to lower your taxes.
Here's hoping you have an awesome season.
Follow up to saving taxes on buying equipment
This is a follow up to the email yesterday that you will save taxes
if you buy equipment (laser/computers) etc
My CPA informed me by email that to GET the tax deduction the item
has to be IN SERVICE by the end of the year.
So you can't pay for it and receive it next year it must be received
Order the laser or computers and have them set aside in the back of
the store if you can't get them up and running during Christmas.
Can't be delivered in 2014.