The end of the year means it’s time to start thinking about taxes. In the United States, the IRS Tax Code Section 179 will allow the deduction of equipment and software purchases by businesses of up to $1 million in 2018. Essentially, it will allow restaurants to deduct the entire cost of a new point of sale system or other equipment upgrades. It could also potentially increase your cash reserves.
How Section 179 Works
Section 179 was designed by the US government to encourage businesses to invest in themselves by purchasing needed equipment or technology. As long as the software or equipment is purchased and installed before December 31st, businesses can deduct the entire cost in their 2018 taxes.
How Much You Save
You can use the 2018 Section 179 Tax Deduction Calculator to see exactly how much your equipment would cost after tax savings. Simply input the cost of the equipment, which can be found on a up-to-date quote, and your tax bracket. From there the calculator will determine the real cost of the equipment after the tax savings have been applied.
If you purchase that equipment or software using financing, you may actually experience a net gain in cash flow. Why? Because you deduct the full amount of the equipment or software in 2018, but don’t pay the full amount in 2018. The tax savings could exceed the amount paid on your financing for the year.
If you have been considering purchasing a new point of sale system, now is the time to take advantage of the available tax deduction. The 2018 limit of $1 million is the highest it ever has been, and allows for 100% depreciation bonus. Take advantage of these tax deductions by purchasing and installing any hardware and software upgrades needed by your restaurant before the end of the year.