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Tax Code Update Could Boost Small Business Technology Spending

How can  MSPs and VARs convince small businesses to invest more in technology? One key answer could involve Permanent Expensing — a recently approved key tax code update that could inspire small businesses to “invest in their own competitiveness,” according to the National Federation of Independent Business (NFIB), a major advocacy group.

Congress this month approved a range of tax code changes that specifically designed for small businesses. For instance, a permanent R&D Tax Credit allows eligible small businesses to claim the credit against the alternative minimum tax liability or against the employer’s payroll tax liability, according to Accounting Today.

Moreover, the so-called Section 179 provision “permanently extends the small business expensing limitation and phase-out amounts in effect from 2010 to 2014; and sets a new threshold at $500,000 and $2 million, respectively, from the current amounts of $25,000 and $200,000, respectively,” according to Accounting Today.

More Small Business Technology Spending?

Dan Danner

Dan Danner

But what does all that mean to small business owners — and their IT service providers? Simply put, Section 179 “allows small businesses to deduct from their annual tax obligation up to $500,000 for the cost of new equipment, machinery, technology and other capital upgrades,” according to the NFIB.

“It’s a tax benefit that encourages small businesses to invest in their own growth,” asserts NFIB CEO and President Dan Danner. That investment, Danner added, will make small businesses more competitive while also creating higher growth and more jobs across the U.S. economy.

Of course, educating small business owners about the tax code isn’t for the feint of heart. Instead of tackling that challenge head-on, IT service providers should tell their small business customers to have their accountants check out the Section 179 provision.

So far, the Section 179 provision seems mostly overlooked in the IT channel. The one source that sent us a heads-up about Congress approving the measure: Stuart Crawford, CEO of Ulistic, which offers marketing services to MSPs.

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