Whether you are the sole proprieter of a small business or in charge of financing or acquisitions for a huge, sprawling business empire, making business purchases is always a good idea. Within reason, of course — spending the whole budget in one fell swoop is the recipe for disaster, as you need something to run on. Business purchases are good in the long run, though, because they help the business reduce taxes.
Simply put, business purchases can be written off as tax deductibles. That means that the more business purchases you make, the less taxes you have to pay come tax time because you can say that you put the money back into the business. For small businesses especially, tax deductions can really help keep the business afloat. Instead of paying that money to taxes, you are essentially getting to keep it for your business expenses.
Traditionally, business purchases for longer term investments, such as company cars or office computers, have been deducted in increments every year. For example, a $500 purchase might be deducted $100 at a time over 5 years. With the 2011 Section 179 deduction, though, businesses are allowed to write off taxes for the entire purchase price of new software, equipment and other productive business items or activities.
It’s the same amount of tax deduction, but it saves the business the burden of paying for most of that $500 purchase price’s taxes each year, instead allowing the business an equal tax break the same year they spent that much money on equipment. The Section 179 deduction is great for small and large businesses alike, and turns business purchase into business advantages.
