31 October 2020

Use Tax Code 179 to Help Close Business

TAX CODE 179

Made Simple

So you’ve you heard of Tax Code 179 . . . but how do you really use it?

Businesses want to REDUCE INCOME TAXES

To reduce taxes businesses either reduce revenues or increase expenses
It is unlikely that businesses want to reduce revenues… So increasing expenses is the logical option
BUT, how does a business increase expenses but not use any of their cash?
Depreciation is how….Tax Code 179 is just using depreciation more effectively
Tax Code 179 allows a business to fully depreciate (i.e. expense) the cost of the equipment/software in the year they purchase it
Depreciation is the expense a business takes for purchasing and using equipment/software
Depreciation is one of those rare expenses that DOES NOT require a business to use money from their bank account

Normal expenses like payroll, insurance and rent are paid with actual cash out of the business’ bank account

Tax Code 179 REDUCES the effective COST of the Equipment/Software (an example)

Equipment/Software Quote = $25,000
Practice’s Estimated Tax Rate= 21%
$25,000 * 21% = $5,250 in 2020 income tax savings
Therefore, a $25,000 piece of equipment less the tax savings of $5,250 equals net project cost of $19,750. You have just shown the practice how to save $$.

Owners can EARN MORE CASH in 2020

Your customer finances the equipment/software through GSG
GSG requires NO $$ down and defers the start of the business’ payments until 2019
Taking the Tax Code 179 Tax Deduction Now with No Money out of pocket for the purchase of the equipment/software in 2020 means….
Owners can take the extra $5,250 in cash (tax savings from example above) out of the business in form of extra bonuses or pay. They make more MONEY.

Use It or Lose It

Tax Code 179 is available to businesses every year, however, it does not rollover
2020 Tax Code 179 Limit: $1,000,000
2021 Tax Code 179 Limit: $1,000,000

GSG Capital, LLC www.gsgcapitalllc.com