Improve Your Business Financials with Depreciating Office Technology
November 29, 2019 | NECS
If you’re thinking about updating your office technology, you should seriously consider shopping before the new year. New office tech for your business can significantly improve both your profit and loss statement and have an impact on your balance sheet for up to five years. But only if you purchase before January 1st.
Office equipment, computers, and software are all depreciable assets. This means that your business qualifies for a tax deduction in the coming year, even if no money was put towards the purchase in that year. Note: these assets have a useful life of five years, so you have the opportunity to write it off until 2024!
When is the best time to take the depreciation expense? That’s a complicated question, and because of all of the variables, it’s one for your accountant. Your options are:
- Deduct the entire cost in the first year.
- Write it off over its five-year lifespan.
Let’s say you choose option b., and you buy two office printers in December of this year for $5,000. You take $1,000 in depreciation in 2019, and that leaves you with a net income of $4,000, which is also recorded as $4,000 in assets on your balance sheet in 2020. What a way to start the new year!
Keep in mind, in order to qualify for the deduction, the asset must be owned by your business and be used to generate income. As a taxpayer, you can then start to recover the cost of your assets and improve your financials overall.
It’s December. If you know that new office technology is in your future, it’s time to start shopping. Take advantage of this tax break before the new year and set your business up for a strong 2020.Not sure which products are right for your business? We can help—contact NECS today.