HAVE YOU HEARD? In case you’re not already aware, there’s this cool little section of the IRS Tax Code that encourages you as a business owner to invest in yourself.
It’s called Section 179, and it allows you to deduct the full purchase price of qualifying equipment and software bought and/or financed during the current tax year.
This IRS incentive is available all year long, but talk of it usually crops up this time every year. Why? Because if you’ve been considering a capital purchase but haven’t pulled the trigger yet, now’s your chance before the clock runs out on December 31.
Need extra incentivizing? This year, with its 100% depreciation bonus applicable to used equipment too, Section 179 is more beneficial than ever to small businesses.
This little tax break can offer some serious tax relief for the type of small businesses we work with in our coffee community. We’ve seen quite a few coffee roasteries and cafes take advantage of this in past years and enjoy real benefits.
Here’s How It Works
Typically when you buy a piece of qualifying equipment, you write it off a little at a time through depreciation. So, let’s say you spend $50,000 on a coffee roaster. You might get to write off, say, $10,000 a year for five years (example only).
Now, while it’s true that this is better than no write-off at all, most business owners would really prefer to write off the entire equipment purchase price for the year they buy it.
And that’s exactly what Section 179 does: It allows your business to write off the entire purchase price of qualifying equipment like a new or used coffee roaster, destoner, K-cup machine, nitrogen generator, or other needed items — perhaps even finance it through our Roaster’s Choice Lending Program — and then deduct the FULL PURCHASE PRICE from its gross income.
Pretty sweet deal, eh?
Here’s A Simple Example
How You Save
A Quick Word About Bonus Depreciation
Bonus depreciation, or the ability to accelerate depreciation, allows a business to write off more of the cost of an asset in the year the company starts using it.
Each year, both new and used equipment qualify for the Section 179 deduction (as long as the used equipment is “new to you”) and the bonus depreciation. However, Section 179 guidelines can slightly change each year, so do consult the IRS website and work with your accountant to confirm current items eligible for deduction.
Also, businesses with a net loss are still qualified to deduct some of the cost of new equipment and carry-forward the loss — a potentially important consideration for you and your business if you were hit hard by operating restrictions due to COVID-19. (Again, consult your financial advisor for specific details.)
How We Help
With CoffeeTec, your new or used equipment purchase is just the very beginning of our relationship. While you enjoy a certain dollar value of cost savings, the fulfillment we get from partnering with you on your roastery journey is priceless. There’s no price tag big enough to capture the return on that investment for us.
We’re always here and have your back. That means we can lend support, guide you, and answer questions about anything and everything coffee-related to help you build the best roastery business of your dreams. We’re just a click away.
Are you ready to finish this year strong and save? Let’s go!