Posts tagged "budget"

IT tax breaks

Tax Breaks for IT: Get Your Fair Share

January 21st, 2018 Posted by Best Practices 0 thoughts on “Tax Breaks for IT: Get Your Fair Share”

With so much red tape, you’d be forgiven for thinking the Internal Revenue Service (IRS) has a love-hate relationship with the country’s small and medium businesses (SMBs). However, when you dive into the details of what most SMBs can claim as tax breaks, it’s clear Uncle Sam is more generous than you think.

Tax Deductions for Tech

First, know that Washington wants tech-savvy SMBs that are equipped for a digital future.

Under Section 179 of the tax code, IT hardware expenses such as desktop computers, laptops, tablets, printers and scanners are tax deductible, up to a certain amount. Depending on the item, you can deduct the full cost on the year of purchase, or split it between several years. Your tax agent will have the details.

Section 179 never sleeps

Recent Section 179 changes added items like off-the-shelf computer software to the list of items that qualify for deduction.

Your SMB can now deduct the full cost of your IT equipment in the first year. The proviso is that you must employ it in that same tax year and use it in your business for at least 50 percent of the time.

Just be aware of the amount you can deduct under Section 179 because it changes each year. Your tax agent can help you maximize your return.

Claim your bonus

Another tax break to remember is bonus depreciation. This allows you to deduct 50 percent of the costs of new capital equipment. However, the bonus depreciation deduction will phase out incrementally from this year, reducing from 50 percent (2017) to 40 percent (2018) and finally 30 percent (2019) before it expires by 2020.

The day-to-day IT expense deductions you must not miss

Operating expenses are the costs you incur in running your business – such as stationery or renting office space. These costs are sometimes called working expenses. You can claim a deduction for most operating expenses in the same income year you incur them. For SMBs, such IT-related expenses might include:

  • Education, technical or professional qualifications.
  • Electricity.
  • Phones.
  • Insurance premiums on your tech gear.
  • Interest on money borrowed to buy your tech gear.
  • Renting or leasing business premises to house your tech gear.
  • Legal expenses, such as those incurred borrowing money or obtaining tax advice.
  • Costs of running a commercial website, such as site maintenance, content updates and internet service provider fees.
  • Tax agent and accountant fees.

Big purchases can bring big breaks

Capital assets – items with some longevity – include buildings, motor vehicles, furniture and of course some IT equipment. SMBs can claim as a capital expense:

  • The cost of an asset that has a longer life (usually more than one income year).
  • An expense associated with establishing, replacing or improving the structure of your business.

Got a website?

You might be able to claim the expenses you incur in creating and maintaining a website for your business, such as the costs of software, website development, domain name registration and server hosting.

Don’t forget any tax gifts from your state

Most states also offer sales tax exemptions for research and development (R&D) and custom computer programming. For example, any custom computer programming purchased by a business is exempt from sales tax. If you buy a standard program, then customize it, the cost of the standard program is taxable. However, the customizing, if you state it separately, is non-taxable.

The tax reward in R&D

Finally, a change in the R&D tax credit means businesses that make less than $50 million annually and invest in research can now apply the credit to the alternative minimum tax (AMT) or possibly even to offset payroll taxes.

The IRS web site has details about the deductions available to SMBs.

Remember, the worst thing you can do at tax time is avoid your share. The second worst thing you can do is pay too much. So, check with your tax agent and make sure you’re getting back exactly what you deserve.

If you would like more information on updating your business hardware, software, or communications, contact Think for a consultation.

Entry-level Workstation is the Way to Go

August 24th, 2016 Posted by Best Practices, Devices, Staff 0 thoughts on “Entry-level Workstation is the Way to Go”

There’s something about that label. An “Entry level” workstation is seen as insufficiently powerful, marginally useful, and substandard when placed on a professional’s office desktop.

This characterization might have been accurate years ago. But today, even entry-level workstations can be capable, powerful computing devices that, under the right circumstances, can be “cool” for users to work with.

Moving entry-level systems from stigma-inducing to cool requires properly making a handful of critical decisions. Get them right, and your organization could save significant money, while boosting user satisfaction with new systems.

What is an entry level workstation?

It usually starts with a modestly powered CPU (often one generation behind the current market leader) and continues to have the following:

  • Minimal RAM (generally 4 GB at this point)
  • Basic graphics capabilities (sometimes, those on the motherboard; other times, those available from an inexpensive graphics board)
  • Gigabit Ethernet

Wrap it all in a basic box with a standard keyboard, mouse, and video monitor, and you have your entry system.

apple-692186_640It might be the perfect system

As companies race to embrace cloud services, it can be argued that the entry workstation is the perfect system for most employees to use.

It might be that what you need is an internal marketing campaign, not a larger budget for desktop workstations. It all depends on the job you’re asking systems to do and the way you present the systems doing the job.

Chromebooks are the very definition of minimalistic workstations. The barest entry-level workstation will be more powerful than the most powerful Chromebook, so the comparison should be frequently made when talking with employees.

Spend where it will be noticed

Spend a few dollars on the components that have the biggest impact on user satisfaction.

1. Keyboard

There is now a dizzying array of keyboards available for purchase. Most of the keyboards that make the “enterprise class” grade are within a few dollars of one another, so employees can be allowed to “customize” their system with little difference in purchase price and no difference in support costs.

2. Mouse

Management could offer employees their choice from a selection of mice or other pointing devices to be used at the desktop.  For minimal difference in price, the employee has a maximum feeling of personalization.

3. Monitor size

The enterprise standard has been twenty-one-inch or twenty-four-inch monitors for nearly a decade. But today, it’s possible to purchase twenty-seven-inch monitors for little to no more money.

The entry-level system doesn’t need to be a symbol of shame, for it can gain access to cloud-based services and information as equally well as much more expensive systems. And if Management will allow for some choice in monitors and accessories, the users will come away feeling more digitally empowered than ever before.

Please contact our sales team at [email protected] if you would like our recommendations or a quote.

How Should You Budget for IT?

April 20th, 2016 Posted by Newsletters 0 thoughts on “How Should You Budget for IT?”

Cast your mind forward 5 years. Will we still send so many emails? Will we be satisfied with a keyboard to fill in web forms and use passwords to log on to secure systems? The changes in speed of access and capability will be many. As facial recognition, voice recognition, and biometrics develop, our concept of how we communicate with machines will change. The effect of cloud computing will drive down the cost of infrastructure and create new potential for business solutions.

Already today there are smarter ways to do things and smarter ways to drive down the risks associated with aging IT systems that are likely to add value to your business. The question is how much should you spend?

We have tried to set a guide based on a percentage of revenue, but that is too vague for many businesses where maintaining margins is hard work. Often a better answer lies in reducing waste or risk. It is important to first of all understand your risk around IT through loss of systems or loss of competitive edge in the marketplace. Then look to business processes with high cost and look for technology to reduce that waste and so reduce the cost per product.

That cost may be in marketing, sales, inventory, materials, or time. The savings will build the business case for spending on IT.

Building a business case

There are some clear costs to IT that you can work into your business case. If you are using PCs, servers, and mobile devices, there is a cost to buying them and maintaining them. This may be a fixed cost if outsourced or a variable cost if you buy the equipment as needed. PCs will vary from a few hundred dollars to a few thousand, depending on the demands you are placing on them, from an email station running a couple of small spreadsheets to a workstation running 3D design tools. You should anticipate three to four years of performance from the right PC, but to stretch it further will have hidden costs in increased downtime, maintenance costs, and poor performance relative to newer machines.

For each new starter in your business you need to factor in the annual cost of a PC, a device, and software, and if you are using cloud, factor in monthly fees. Again, these will vary from application to application, but you should be able to figure out what your costs will be. There is also the cost of supporting each person in your business in terms of their IT tools, which will either be a direct cost or a hidden cost. The costs are hidden when you have no formal support arrangement and your staff waste productive time fixing their own IT problems or working around them. Direct costs are usually lower than hidden costs, because problems are fixed efficiently. Management of an individual’s IT environment will cost from a few hundred dollars a year to a few thousand depending on the complexity of the systems being used.


Dealing with growth

If your business is growing through any of the critical points of 5, 12, 20, 30 or 50 staff you may need to revisit your infrastructure strategy and change how you share, store, and protect your data. As you pass through any of these phases, you will need larger, more expensive systems unless you have adopted a scalable cloud solution that allows you to simply add one more team member to the account. Of course not all applications have a cloud version yet, so you may need to invest in a hybrid solution with some servers and some cloud.

The more you can push to cloud, the less capital expenditure you will need to budget for, but keep an eye on the comparison costs over a four-year period. Many cloud solutions are cost effective for the enterprise but not for the smaller business. For a fast-growing start-up, the cost of cloud is not the issue as it is all about the freedom to grow without the need for expensive upgrades.

Understanding your business and getting the right advice on suitable technologies may give you the advantage you are looking for. It is a great time in the IT technology cycle to be on top of your business and well informed.

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