Manufacturing software expense is actually less than it appears because of a tax deduction opportunity. Two years ago, Congress passed the Protecting Americans from Tax Hikes Act, also known as the PATH Act. This piece of legislation was designed to help families and businesses through tax reductions and provisions. Within the Path Act tax break is the Section 179 deduction opportunity, which helps businesses bear the weight of expensive shop equipment, so they have the opportunity to grow their company through their investment. The PATH Act modified Section 179, raising the deduction cap to $500,000 and it remains there in 2017.
Don’t wait years to deduct big ticket items that you need to run your business. Section 179 allows for depreciation (for most, if not all of it!) of your purchase in the year you make that purchase. Learn more about Section 179.
Taking Advantage of Section 179 to Reduce Manufacturing Software Expense
Section 179 gives businesses the opportunity to deduct up to $500,000 each year for equipment and software purchases. In addition, it allows businesses to depreciate up to 50 percent of the purchase price over the cap. Therefore, if you bought $700,000 worth of equipment, you could deduct $500,000 for the purchase as well as $100,000 as 50 percent depreciation for the remaining $200,000 that falls above the $500,000 cap.
Section 179 provides a great opportunity to move forward with plans to implement manufacturing software or ERP software in your shop at a lower manufacturing software expense. The only stipulations are that the software must be entirely for business purposes, purchased outright, not heavily customized for your shop, and have a life expectancy of more than one year. If your purchase meets these requirements, you are essentially receiving a discount on a much needed solution for your business.
There is Still Time This Year
As the last couple months of 2017 are approaching, now is a great time to purchase your manufacturing or job shop software. There is still time for implementation by the end of the year, and if you don’t use the deductions in Section 179, you lose them! In addition, if the holidays are a slow time for your company, this could be an ideal time to input data and train your team.
Make these last couple months the most productive of the year, so you can start into 2018 in strong standing. Purchase the system, train your team, and start improving your overall efficiency, eliminating waste, increasing quality, and boosting your bottom line.
Contact an E2 expert today to learn more about our ERP systems. Whether you are a make to order shop or a highly repetitive manufacturer, we have a solution for you. Shoptech Software delivers a SaaS option as well as on-premise. Our Implementation Specialists are second to none in having your business up and running in a short amount of time. They will work with you every step of the way!