Sales and marketing, Small business

Selling SMB Customers on Tech Tax Write-Off: Section 179

Savvy IT service providers have jumped on a recent tax code update, promoting the so-called Section 179 Permanent Write Off as a way for small business customers to refresh their hardware and software before the end of 2015.

The big twist: This isn't a one-time opportunity. VARs and MSPs should get familiar with the Section 179 write-off to help drive equipment sales each and every year. Moreover, small business owners can apply the write-off on leased equipment, according to tax code documentation.

Approved by Congress earlier this month, the 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.

Small business organizations like the National Federation of Independent Business (NFIB) have praised Section 179 as a way for small business to "invest in their own competitiveness."

Section 179 and IT Service Providers

Dustin Puryear
Dustin Puryear

Some IT service providers are jumping on the Section 179 bandwagon and explaining the write-off provision to small business customers. A case in point: Puryear IT, an IT service provider in Louisiana, has acquired the URL to help existing and target customers understand the tax write off benefits, and potential ways to more effectively consume technology each year.

"Mostly, the chatter is 'Wait, what? I can do that?,” says Dustin Puryear, founder and technology strategist at the company. "Most people don’t know about Section 179 and they definitely are shocked about how you can work the buyout lease option."

Indeed, small businesses can "lease equipment and still take full advantage of the Section 179 deduction," according to the tax regulation.

Section 179: Long-Term Strategy

Still, ChannelE2E senses that very few IT service providers are aware of the Section 179 write-off. And even fewer are educating their customers about the potential benefits from the tax code, though market educators like Ulistic are banging the drum for the write-off.

Some pundits may think the write-off opportunity expires on December 31 -- just as the New Year gets set to arrive and small business customers shift their mindset to 2016 budgeting and spending. But that thinking is dead-wrong. The entire point of Section 179 is a permanent tax code update.

That means IT service providers can promote the write-off to small business customers each and every year. And small business customers, in turn, can likely purchase or lease more solutions each year to keep their businesses humming along.

Joe Panettieri

Joe Panettieri is co-founder & editorial director of MSSP Alert and ChannelE2E, the two leading news & analysis sites for managed service providers in the cybersecurity market.