How to Grow Your Sublimation Business: IRS Section 179
Disclaimer: I am not a CPA, the information provided is simply a guide to point you in the right direction. Any advice shared is for educational purposes and should not be solely used for making financial decisions. Please speak to a licensed and certified CPA or Tax accountant for more information.
So what is Section 179?
Section 179 of the IRS Tax Code allows businesses to deduct the entire cost of qualifying equipment or software in the year it was purchased or financed. How can this help grow your business? Read below to learn how.
What does this mean for you?
Section 179 means that you can buy an asset and fully depreciate it in the year it was purchased.
Here’s an example: Say you want to buy a heat press and wide format dye sublimation printer. The total for the purchase is $5,000. Section 179 allows you to purchase these items and fully depreciate them in the year they were bought.
Why is this important?
If you don’t use section 179, then normally you would depreciate these items over the course of 5 or 10 years. A 5,000 purchase would depreciate $1,000 every year for 5 years and you take a $1,000 deduction every year for 5 years.
With section 179 you can fully depreciate a qualifying purchase in 1 year and deduct 5k.
Section 179 is especially appealing to small businesses because it allows them to deduct the full cost of equipment or software before paying off their loans. Because your business can have the equipment right away, they can start making money and keep their working capital healthy.
The deduction can also significantly lower the barriers to entry for newer businesses when it comes to purchasing equipment. Using Section 179 allows small businesses to invest the money saved through the tax write-off to help their growth in other areas.
This is great news if you’re looking to get new equipment or trying to expand your business!
Requirements for using section 179
- Must be a business or business owner. (Sole Proprietor, LLC, C-Corp, etc)
- The asset(s) must be used for at least 50% business purposes. If the asset being used is split between business and personal use then only a max 50% deduction can be taken.
- Example: You are a business owner and you purchase a 50k vehicle that will be used for personal and business use (50%) then the max you could deduct using section 179 would be 25k.
For more information please visit IRS.gov
-Here are some links with more information
-Section 179 Guide
-Depreciation Expensess