I’m on a bit of a Section 179 kick as of late, and wanted to mention something I’m sure I’ve talked about before, but it bears repeating: Section 179 can be used by any type or size business.
Section 179 doesn’t care if you’re a sole proprietor, a partnership, or a corporation. It doesn’t care if you’re on Main Street or Wall Street. It doesn’t care if you have nine buildings and 10,000 employees, or if you’re a classic small business with one location and a handful of employees.
Here’s what you need to qualify for Section 179:
Be a Real Business. This means you’re a registered business, with a business bank account.
Show a Profit. Since Section 179 reduces a company’s taxable income, the company must have taxable income in the first place. Also note that Section 179 cannot be used to “create” a loss.
Buy / Finance Eligible Equipment and Put it into Service. Pretty self-explanatory here. You have to buy eligible equipment (which, honestly, is just about any tangible equipment you use in your business), and start using it by the deadline (always midnight Dec 31 of the current year).
And that’s it.
I got on this topic again because my commercial landscaper friend told me he couldn’t fully deduct several new zero-turn mowers, and instead had to depreciate them yearly – basically, he said “only big businesses get the big write-offs”. I asked him why he thought that, and he really couldn’t answer me – he just assumed that a small business like his couldn’t fully deduct equipment purchases. Not true at all. Trust me, I set him straight.
It always amazes me how many businesspeople either haven’t heard of Section 179, or if they have, think it isn’t for them. I’m also somewhat amazed that their accountants aren’t mentioning it. Maybe they feel the client needs to ask about it, or they assume the client would rather have a smaller yearly write-off? I don’t know all the answers there, but I do know almost everyone who “didn’t” know about Section 179 is super enthused once they learn that yes, it’s for them too.
Bottom line: As long as there’s taxable income and eligible equipment purchased for business use, Section 179 is there to be used. So use it.