By Robb Richardson
There has never been a better time for scanning service bureaus and other small businesses to thrive as now. The new U.S tax laws are exceptionally favorable when purchasing office and other equipment; this is set to save businesses hundreds of thousands of dollars!
Viewed by experts as a complement to PATH (Protecting Americans from Tax Hikes), the new tax regulations will contribute immensely towards saving small businesses over $620 billion by 2025.
As permanent incentives, the changes target the procurement procedures with the intent to streamline operational budgets. Unlike before, these tax provisions are not subject to the whims of lawmakers, fostering a stable and more confident business environment.
Scanning Service Bureaus
As companies gather more big data in this IoT age, scanning documents becomes time-consuming and tedious. If you are a scanning service bureau, the purchase and maintenance of scanners and other equipment is a breeze under enacted tax guidelines.
Section 179 in the U.S Tax Code grants taxpayers the option to enlist certain property and equipment under expenses. These are then deducted from income tax, drastically lowering purchase prices.
When purchasing scanners and other select office supplies, bureaus can now write off cumulative costs over several years! If you have a lean operating budget, this huge relief can be extended throughout the equipment’s projected lifespan.
Typically, scanning equipment depreciates with time, mincing away its value with each use. Rather than purchase a photocopier for $10,000, business can make $1,000 deductions annually over ten years.
Simplifying the Deduction Process
As a business owner, the thoughtful deduction process allows you to write off entire purchases within the same year they are made! Currently, the maximum amount deductible is $1 million, well within the realization of small and medium enterprises.
Initially, the maximum amount deductible was $10,000, leaving businesses with huge deficits from each new equipment purchase.This incentive motivates American small businesses to invest and grow further.
Equipment Covered Under Section 179
To accord scanning service bureaus more leverage, wholesome deductions to all equipment costs annually translates into more purchasing power. However, IRS has strict definitions for equipment covered by this new tax provision.
The equipment must be acquired by purchase, for business use, and eligible. Computer equipment, printing presses, and off-the-shelf Software Office Machines fit this description. As long as the equipment is new to you’, the deduction also applies to previously used supplies.
Note: While the new tax regulations curtail annual deductions at $1 million, small business investments are limited to $2 million within the same period. Beyond this, deduction is reduced by the dollar. Should annual investment in assets hit $2.5 million, the 179 tax provision will cease being beneficial.
Development and Research
Research facilities need top-tier scanning equipment to make the most of each hypothesis. In recognition of the unique role they play in supporting startups, the new tax laws, tax credit has been revised permanently.
If yours is a startup, claiming credit against your payroll tax liability offers you boundless growth opportunities. In recognition of the stiff competition and amazing innovations arising from startups, the new tax laws create a level playing field.
Upon request and review, a business can take a deduction on the purchase of qualified equipment beyond what is typically available. In 2018, the bonus will drop to 40% before stooping to 30% a year later. This provision will then cease; there is still time to make the most out of it!
This bonus, unlike the 179 deductions, is only applicable to brand new equipment. Combining bonus depreciation with the section 179 expensing will have huge impacts on business’ profit margins going forward.
Hiring Less, Automating More
Under the new Tax Cuts and Job Act, the reduced threshold for purchasing equipment is set to see a 20% reduction in payroll costs. The labor-replacing machinery, such as advanced scanners, is taking the retail industry by storm. In a mere 10 years, 7.5 million jobs will be automated!
The reduction in short term taxes has been warmly welcomed; businesses acknowledge that money is worth more now than in the near future. As these provisions begin phasing out in five years, more retailers are expected to offer more automated services.
With new and automated equipment, retailers will be saving $14 more by cutting-down on the workforce, a 20% increase from 2017.
Investing in Scanning Equipment
If the prices remain as they are, businesses are advised to accelerate purchase of equipment. The new tax savings are readily applicable sooner than later, leaving you with fewer obligations. Immediate expensing under the new tax plan is especially beneficial to capital-intensive businesses.
Even as small businesses reap big, the long-term effects of the tax break are still anyone’s guess. Could this instigate a capital-investment hangover as later as 2022? The lawmakers have combated a potential future recession with the five-year provision.
Immediate Expensing Has Worked Before
Prior to the tax bill, immediate expensing had been tried but not at this maximum level. Small businesses are expected to do impeccably well as these unprecedented levels roll out! Some business lobby groups, however, want this provision made permanent altogether.
To boost productivity and increase investments, an extended expensing period will give businesses the absolute confidence to place even larger stakes. Scanning Service Bureaus, categorized as corporate organizations, will be enjoying a tax rate drop to 21% from 35%.
Businesses Get to Keep Larger Shares of Their Incomes!
Small Businesses Reap Big With permanent deduction provisions, enticing perks, and the expensing incentives, scanning services and other small businesses are off to a good start.
While businesses will eventually lose the bonus depreciation, other incentives might be in the offing by 2022.
Planning your business investments and expenses will be more rewarding, thanks to the accommodated tax laws enacted. This level of predictability is already seeing huge interest in other capital-intense business setups.
Before You Go
Purchasing new equipment is a substantial investment; planning out well in advance is crucial to success. Have the new tax laws proven beneficial to you yet? Let us know in the comment section.
If you would like to learn more about the newly enacted tax laws and ho w they will impact your business, get in touch.Your prosperity in business is our biggest motivation. We look forward!