As a business owner, you are undoubtedly reviewing capital investment options in order to reduce your company’s tax burden by implementing IRS Section 179 by December 31st. Before you settle for just another piece of equipment, why not leverage this opportunity to update your work space in a way that will reduce your company’s recruitment and retention costs and increase your ROI by creating a workspace that will help you attract top talent and new clientele. Is your business in need of an update? Ask yourself the following questions:
- Does your floor plan boost employee productivity and engagement?
- Is your space supporting your brand image?
- Are you planning to grow?
Taking advantage of this opportunity will both save you money in corporate taxes and give you a workspace that will pay you back. Here’s how it works –
Let’s say you are profitable this year.
You have a net income of $100,000 that you are posting on your 2017 corporate tax return.
If you are a C Corp then your blended tax rate will be 22.25%, and owe the federal government $22,250 for corporate taxes for 2016. Not to mention applicable state taxes.
However, if you purchase $100,000 in assets, you get to 100% depreciate that $100,000 purchase on your 2017 corporate tax return.
Now you have an additional depreciation expense of $100,000 on your 1120.
$100,000 in net income – $100,000 in depreciation expense = $0 in net taxable income.
$0 in net taxable income = $0 in tax dollars due = $22,250 is savings for your company and its owners.
But remember all invoices must be sent before December 31st. So don’t wait!