Best End-of-Year Tax Tips toSave Your Business Money

Digium, Inc. • Barbara Weltman

Smart Deductions for Small Business

Barbara Weltman was afeatured guest expert in awebinar, “Smart Deductionsfor Small Businesses,”sponsored by Digium, Inc.

Big Ideas forSmall Business, Inc.Attorney and advocateof small businessesfor over 30 years:2013 Small BusinessInfluencer ChampionPublisher of Big Ideasfor Small Business®

and Idea of the Day® at

www.barbaraweltman.com

Blogger:SBA.gov; Small Biz Trends

Guest columnist: The Wall Street Journal, U.S. News and World Reports, and Entrepreneur.

Author: J.K. Lasser’s Small Business Taxes (Wiley)

A small business cannot a�ord to miss anopportunity to save money.

Yet one of the most commonfinancial mistakes small businesses make is overlooking key, moneysaving tax deductions.

Section 179 is a tax deduction allowing businesses to write-o� up to $500,000 in qualifying equipment purchases made in 2013.

This special deduction is set todrastically decrease next year,

making it imperative that businesses take full advantage of it in 2013.The Section 179 Tax Deduction is a deduction that can be particularly beneficial in helping businesses a�ord IT projects, such as replacing legacyphone systems with upgradedbusiness communications solutions.

Because some equipment can alsobe leased, it can mean an evengreater total savings on year-end communications purchases.

Successful businesses take advantage of legal tax incentives to help lower their operating costs. The Section 179 Deduction is a tax incentive that is easy to use and gives businesses an incentive to invest in themselves by adding capital equipment.In short, taking advantage of the Section 179Deduction will help your business keep more capital, while also getting needed equipment, vehicles, and o�-the-shelf software.

You should contact your tax advisor to learn about the specific impact to your business.

Key findings in Balboa Capital’s survey of small business owners:

45% are not familiar with Section 179

47% have elected to take the Section 179 Tax Deduction in years past

54% plan to use the Section 179 Tax Deduction in 2013

45% will invest in up to $50,000 worth of capital equipment in 2013

28% will finance equipment in 2013, 17% will apply for a bank loan

Basic year-end strategiesAssess whether youare profitable■ Check your P&L statement through November■ Make projections for December■ Talk with your tax/financial advisor about your numbers

How Section 179 WorksWhen your business buys certain items of equipment, it typically gets to write them o� a little at a time through depreciation. In other words, if your company spends $50,000 on a machine, it gets to write o� $10,000 a year for five years (these numbers are only meant to give you an example). Now, while it's true that this is better than no write o� at all, most business owners would really preferto write o� the entire equipment purchase price for the year they buy it.

In fact, if a business could write o� the entire amount,they might add more equipment this year instead ofwaiting over the next few years. That's the whole purpose behind Section 179—to motivate the American economy (and your business) to move in a positive direction. For most small businesses (adding total equipment, software, and vehicles totaling less than $500,000 in 2013), the entire cost can be written-o� on the 2013 tax return.

Basic year-end strategiesFor profitable businesses:

Cash basis: ■ Defer income■ Accelerate deductions■ Decide on year-end bonuses■ Make equipment purchases■ Set up qualified retirement plans

Business EquipmentUnder Section 179, businesses may write-o� up to $500,000 on qualified equipment purchases and leases of up to $500,000 in 2013. Businesses that exceed the threshold of $500,000 in capital expenditures can take a Bonus Depreciation of 50% on the amount that exceeds the above limit. The equipment must be placed intoservice between January 1 and December 31, 2013.

If a business is unprofitable in 2013, and has no taxable income to use the deduction, that business can elect to use the 50% Bonus Depreciation and carry-forward to a year when the business is profitable.

Tax Code Section 179and Election to Expense DetailThe election, which is made on Form 4562, is for the tax year the property was placed in service or an amended return filed within the time prescribed by law. Section 179 property is property that you acquire by purchase for use in the active conduct of yourbusiness. To ensure property qualifies, reference Section179.org.

This expense deduction is provided for taxpayers (other than estates, trusts or certain non-corporate lessors) who elect to treat the cost of qualifying property as an expense rather than a capital expenditure. Under Section 179, equipment purchases,up to the amount approved for a given year, can be expensed (deducted from taxable income) if installed by December 31st.Non-tax leases qualify for this deduction in their year of inception.

Any excess above the expensed amount can be depreciateddepending on the equipment type. Not all states follow federal law. Contact your tax advisor for further details or visitwww.irs.gov for specific details.

Basic year-end strategiesIf your business expectslosses for the year:■ Get ready to claim a net operating loss (NOL) carryback

NOLs generate cash flow to help your business

Frequently Asked Questions (FAQs)Do phone systems qualify?Yes, Switchvox business phone systems qualify, includingthe IP PBX, handset phones, routers, etc. However, costsfor subscription and maintenance are not included in theSection 179 deduction.

Does the equipment have to be installed in the U.S.?Yes, the equipment must be placed into service withinthe United States.

Does my business have to be profitable in 2013?No, even businesses that are not profitable in 2013 qualifyfor tax deductions.

Call us today and get a free consultation on your business phone system needs! Call 256-428-6262 or 1-877-344-4861.

Act Now!Acquire and put yourbusiness equipmentto use before year-end! Interestedin learning more?We’ll provide you with a free consultation and extend finance solutions so you can acquire the businessequipment you need.

Contact us today!Call 256-428-6262or 1-877-344-4861.

Plan now for 2014

Fix your budget

Get health coverage settled

Watch for extensions of expiring laws

Watch for new taxes that could come from the bi-partisan budget committee (report due December 13 but likely to be delayed)

Looking ahead

Digium®, Inc.Digium, Inc. provides Asterisk® software, telephony hardware,and on-premises and hosted Switchvox business phonesystems that deliver enterprise-class Unified Communications(UC) and UC as a Service (UCaaS) solutions at an a�ordable price.

Digium is the creator, primary developer and sponsor of theAsterisk project; the world’s most widely used open sourcecommunications software. Asterisk turns an ordinary computerinto a feature-rich communications server.

Since 1999, Digium has empowered developers to createinnovative communications solutions based on open standardsand open source software, providing an alternative to proprietaryphone systems. Digium Switchvox Cloud and other cloud-basedproducts and services are o�ered through Digium Cloud Services,LLC, a wholly owned subsidiary of Digium, Inc. Digium’s businesscommunications products are sold through a worldwide networkof reseller partners.

www.digium.com • www.asterisk.org

A community of morethan 80,000 developers

and users worldwideuses Asterisk to create

VoIP communicationsolutions in more

than 170 countries.

Switchvox®. Enterprise-class featuresat a price you can a�ord.

In an e�ort to provide a similar solution accessible to everyone, Digium o�ersSwitchvox — a full Unified Communicationssolution, built on the power of Asterisk.

Switchvox is a business phone system specifically developed for small- and mid-sized businessesand organizations that want the power of theopen source Asterisk solution, but without the need for custom development skills forinstallation. The advanced features, ease-of-use, and simple out-of-the-box setup make Switchvox an ideal solution for organizations with limitedtechnical sta�.

A full-featured UC solution, fueled by theinnovation of open source technology and open standards, Switchvox allows users to integratetheir phone system with their existing networksand get all of the advanced features they need ata price they can a�ord. Most importantly, by usingAsterisk open source software as the foundationfor Switchvox, Digium is able to provide acommunications system with superior capabilitiesfor a fraction of the cost of proprietary systems.

Digium’s Switchvox solution delivers UC features everywhere you need it: on-site, in the cloud, andwith mobile. www.digium.com/switchvox

Founded in 1999, Digium is the creator and primary developer of Asterisk,the industry’s first open sourcetelephony platform. More than one million customers in 125 countries havedeployed Asterisk-based systems.Digium is committed to ending thedays of expensive, proprietary telecom. The Switchvox family of UnifiedCommunications solutions is built on Asterisk and is designed to provide enterprise class features at a�ordable

Want more informationon Switchvox? Take a virtual tour ofthis powerful UnifiedCommunications platform:www.digium.com/switchvox

Contact us — we’re here to help.Talk with a Switchvox specialist: 1 877 344 48611 256 428 6271sales@digium.com

Digium®. We’re changing the way businesses communicate.

prices for small and medium businesses. The award-winning line of SwitchvoxIP PBX phone systems provides more than a phone system—it delivers a Unified Communications platformthat integrates multiple features that increase productivity and lower monthly communication costs. It’s the a�ordable solution with a proven return oninvestment for businesseswith 10 to 600 users.

Learn more at digium.com/switchvox

Copyright © 2013 Digium, Inc. All rights reserved. Digium, Asterisk and Switchvox are trademarks of Digium, Inc. All other trademarks are property of their respective owners. 2013 18 Dec.

www.digium.com • www.asterisk.org