Tax Laws Help Small Businesses Invest in New Computers

Small businesses can’t afford the hidden costs that come with old computers.

A successful small business is built on hard work, focus, and thousands of smart decisions—some big and some small—all adding up to a winning strategy. One of the most important decisions a small-sized business can make is when to buy new computer equipment.

Digital transformation isn’t only an imperative for large enterprises. Small business owners operate in an increasingly connected environment, competing with rivals all over the world for a global customer base. Modern PCs are essential tools in this landscape. Fortunately for small business owners in Australia and the U.S., tax laws are making it easier for businesses to buy new computer equipment with the frequency the digital economy demands.

For example, the new tax law in the United States, officially known as the Tax Cuts and Job Act, expanded depreciation benefits for equipment like computers and computer software. Before the new tax law, small business owners had to deduct the cost of new equipment over several years. The new tax law allows small business owners to deduct the entire cost of new equipment in a single tax year.1 2

“The immediate deduction is a very effective tool for deferring taxes,” said Bishop Toups, a tax lawyer and author in Florida. “Without the immediate deduction, many small-sized businesses would have had to pay their taxes on their income up front and then buy the deductible asset if they could afford it—and then still have to depreciate the asset over time.”

Small businesses can also deduct up to $1 million for equipment placed into service, compared to $500,000 before the new tax law went into effect this year.1

New tax rules in 2018 also made deducting the cost of new computers a little easier in terms of record-keeping. By removing computer equipment from the “listed category” deductions in section 179 of the IRS tax code, small business owners no longer need to keep detailed records documenting when the computer is used for business and when the use is personal.3 Any computer used at least 51 percent for business purposes is deductible up to the percentage used for business.1

Small businesses are the bedrock of the global economy. When tax codes make it simpler for small business owners to invest in the latest computers, everyone comes out ahead.

Meanwhile, Down Under

Australia is also allowing small business entities (which have an aggregated annual turnover of less than $10 million) to deduct the entire cost of depreciating assets in a single tax year, provided the asset is less than $20,000. As in the U.S., small business owners can deduct the percentage of the computer used for business. However, unlike in the U.S., a computer that’s used less than 51 percent for business still qualifies for a deduction. For example, a $2,000 computer used 20 percent for business would bring a $400 deduction. Australia’s provision has been extended to June 30, 2019, under the 2018-2019 Australian Federal Budget, which will provide additional incentive for many small businesses to increase their capital expenditure spend.4

Such policies have a big impact because small businesses are the bedrock of the global economy. When tax codes make it simpler for small business owners to invest in the latest computers, everyone comes out ahead.

Why New Computers Now

Old computers are not just frustrating; they cost small business owners time and money. A four-year-old computer eats up a week a year. Every five-year-old computer drains $12,495 from small business owners every year in lost productivity, extra costs, and missed business opportunities.5

The digital age has also ushered in a fierce competition for talent. The best employees—the ones who can make a difference between success and failure for a small business owner—don’t want to work on older computers. It’s not only millennials who expect current technology to do their jobs; the talent a small business needs to thrive requires computers that are high performing, mobile, simple to use, and durable.

When small businesses are vying for customers and talent, getting by with old computers is bad business sense.

Technology Built for Business

A new computer running 8th Gen Intel® Core™ i5+ processors with 16GB of Intel® Optane™ memory delivers 81 percent more responsiveness for everyday tasks.6 7 These activities are essential to the smooth operation of small businesses thanks to Intel® Optane™ memory, a smart, adaptable system accelerator. By remembering the programs you use most frequently, Intel® Optane™ memory can load large media files up to 2.9x faster.8

New PCs with Thunderbolt™ 3 ports can enjoy transfer times that are up to eight times faster than with traditional USB ports, said Jason Ziller, general manager of the Client Connectivity Division at Intel: “Delivering the most advanced, efficient, and versatile input/output solution available, Thunderbolt™ 3 ports helps business users get the most out of the latest thin and light notebooks and 2 in 1s”.9

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Product and Performance Information

2Nothing in this article should be construed as tax advice. Please see your tax advisor for advice specific to your business.
5Study of 1,020 small businesses in five countries by Jack Gold 2018
6Intel, the Intel logo, Intel® Core™, Intel. Experience What's Inside, the Intel. Experience What's Inside logo, Intel Inside®, the Intel Inside® logo, and Intel® Optane™ memory are trademarks of Intel Corporation or its subsidiaries in the U.S. and/or other countries. *Other names and brands may be claimed as the property of others.Intel® technologies' features and benefits depend on system configuration and may require enabled hardware, software, or service activation. Performance varies depending on system configuration. No computer system can be absolutely secure. Check with your system manufacturer or retailer or learn more at intel.com.au. Tests measure performance of components on a particular test, in specific systems. Differences in hardware, software, or configuration will affect actual performance. Consult other sources of information to evaluate performance as you consider your purchase. For more complete information about performance and benchmark results, visit http://www.intel.com/benchmarks. Intel is a sponsor and member of the BenchmarkXPRT Development Community, and was the major developer of the XPRT family of benchmarks. Principled Technologies is the publisher of the XPRT family of benchmarks. You should consult other information and performance tests to assist you in fully evaluating your contemplated purchases.
7As measured by SYSmark* 2014 SE Responsiveness Subscore comparing 8th Gen Intel® Core™ i5+ 8400 (16GB Intel® Optane™ memory module) + 1TB HDD vs. 8th Gen Intel® Core™ i5-8400 (HDD only).
8The benchmark results reported above may need to be revised as additional testing is conducted. The results depend on the specific platform configurations and workloads utilized in the testing, and may not be applicable to any particular user’s components, computer system, or workloads. The results are not necessarily representative of other benchmarks and other benchmark results may show greater or lesser impact from mitigations. Software and workloads used in performance tests may have been optimized for performance only on Intel® microprocessors. Performance tests, such as SYSmark* and MobileMark*, are measured using specific computer systems, components, software, operations, and functions. Any change to any of those factors may cause the results to vary. You should consult other information and performance tests to assist you in fully evaluating your contemplated purchases, including the performance of that product when combined with other products. For more complete information about performance and benchmark results, visit http://www.intel.com.au/benchmarks.As measured by Media Project Load comparing 8th Gen Intel® Core™ i5+ 8400 (16GB Intel® Optane™ memory module) vs. 8th Gen Intel® Core™ i5-8400 (HDD only).
9Move massive files, images, and videos up to 8x faster with a Thunderbolt™ 3 port vs. a traditional USB 3.0. As compared to other PC I/O connection technologies including eSATA, USB, and IEEE 1394 Firewire*. Performance will vary depending on the specific hardware and software used. Must use a Thunderbolt™-enabled device. Intel® technologies’ features and benefits depend on system configuration and may require enabled hardware, software, or service activation. Performance varies on system configuration. No computer system can be absolutely secure. Check with your system manufacturer or retailer or learn more at intel.com. Thunderbolt and the Thunderbolt logo are trademarks of the Intel Corporation or its subsidiaries in the U.S. and/or other countries. For more information go to http://www.intel.com.au/content/www/au/en/products/docs/io/thunderbolt/thunderbolt-technology-developer.html