|Technology Trends: What To Expect in 2016 |
The new year is a great time to open up a discussion on upcoming technology trends. From becoming overburdened by smart devices, to the increased responsibility and management all this new tech (and its data) generates, we can help these trends work FOR your business:
- The Internet of Things (IoT)– If you’re not familiar with the term, the Internet of Things refers to our expanding universe of devices that can communicate over the Internet and with each other, ie., a “smart” piece of technology.Here’s a simple explanation if you’d like to delve into it more. The IoT includes mobile devices, wearable tech (such as watches, fitness technology), consumer and home electronics, automobiles and environmental controls (a/c systems, security/alarm systems). With waves of smart devices being incorporated into business environments, experts at The Fulcrum Group are always available to advise on how to manage and monitor the IoT devices that are increasingly becoming part of our network environments.
- Big Data Explosion – The explosion of the IoT means there are more devices than ever creating data which leads to larger sets of data to have to parse thru and analyze. At The Fulcrum Group, we have access to strategic partners who can help you make sense of your big data and pull it all together for you. Here are a couple of additional resources on Big Data solutions that small business owners might find helpful:
How Small Businesses Can Embrace Big Data
3 Steps to Incorporate Big Data Into Your Small Business
- Cyber Security is more important than ever. We devote an entire month in October to it as a priority topic for our clients to concern themselves with. Security policies and procedures to protect your network and computing environment require due diligence with buy-in (even and especially) at the executive level. Cybersecurity needs to be a top business priority, including implementing reliable and tested policies, response plans, best practices, training your employees, and more. We provide you with a ton of resources on the topic all around our website, blog, and throughout our newsletters and white papers archives.
- Technology Vendor Consolidation – Currently, we are at the base of a wave of tech company consolidations that are seemingly fueled by as fierce an el Nino as this year’s wacky weather! Choose your tech vendors carefully. We can connect you with a Fulcrum Group virtual CIO to help you make the most solid technology vendor choices.
- Astronomical growth of Amazon web services and MS Azure will continue – If you haven’t yet heard much yet about these ways of “renting cloud resources”, you will. Expect to hear much more about acquiring cloud services in these ways, and building on your business applications/servers, saving you the trouble and expense of having to purchase the hardware.
If you haven’t yet dipped your toe into the public and hybrid clouds from MS and Amazon, contact us right now to learn more!Feel free to continue the discussion of technology trends for 2016 on our Facebook page. We’re always up for some good tech talk!
|2 Great Tax Opportunities for Small Businesses |
This article comes to you courtesy of Mike Pine, CPA – owner of Pine & Company, CPAs, PLLC – a strategic partner of The Fulcrum Group, located in Keller, Texas.
Although general tax law requires that taxpayers treat the purchase of assets having a useful life of more than one year as a capital asset (meaning they cannot expense the entirety of the purchase, rather they must depreciate the cost of the purchase over a certain period of years), there are two general rules that allow a taxpayer to expense the cost of any capital asset immediately in the year purchased.
These two general rules are known as the “Section 179 Deduction” and the new “De minimis Safe Harbor Limits for Capital Expenditures”. Following are very brief and general explanations of these rules, however because they are general rules and every taxpayer has a different set of circumstances, it is always strongly advised that taxpayers consult with a CPA before basing any purchases off of their income tax savings expectations.
For the current tax year both computer equipment and software are eligible for these deductions.
Section 179 Deduction
The simplest way to immediately write off the cost of a capital asset is by using the Section 179 deduction. On December 18th of 2015, the President signed new legislation making the increased Section 179 deduction limits permanent, and they will also increase with inflation in future years.
In 2016, a taxpayer may deduct up to $500,000 of capital asset purchases in the tax year they were purchased. However, this is limited by the total value of fixed assets purchased by the taxpayer during the year. Once the fixed asset purchases of the taxpayer exceed $2,000,000, the Section 179 deduction is limited dollar for dollar, when purchases exceed that amount. For instance, if a taxpayer purchases $2,200,000 of capital assets, they may deduct $300,000 of the purchases under Section 179. (Purchases exceeded the $2,000,000 threshold by $200,000, therefore the allowable $500,000 deduction was reduced by $200,000, or $300,000 was eligible for Section 179.) Additionally, without regard to the limits above, any purchase that is otherwise required to be depreciated over time, is eligible to have 50% of such purchase immediately written off, with only the remaining 50% required to be depreciated over time under the “Bonus Depreciation” rules until 2017.
De minimis Safe Harbor Limit for Capital Expenditures
In recent years, the IRS has provided Safe Harbor for businesses that found it overly cumbersome to treat all of their numerous purchases of property that have a useful life of greater than one year as capital assets, and thereby being required to either deduct them under Section 179 or depreciate each purchase over a number of years.
These safe harbor provisions are beneficial to many businesses and allow for the immediate expensing of purchases of otherwise depreciable capital assets, but the rules required to do this are quite complex, and again it is strongly recommended that you consult with a CPA when availing yourself or your business of these benefits.
Generally speaking, as long as a business has created and documented an expense versus capitalization accounting policy, it may immediately deduct any purchase of $2,500 (increased from $500 in December of 2015) or less, per invoiced item.
If the business issues what the IRS has determined as Applicable Financial Statements (AFS), the limit grows to $5,000 per invoice item. The simplest way to achieve the AFS requirement is for a taxpayer to have their financial statements audited by a CPA firm for purposes other than simply tax, however the typical financial statement audit these days can easily cost more than $30,000 as well as a lot of time from the taxpayer’s financial staff, and themselves. There are other ways to achieve the AFS requirement, including being required to report financials to a regulatory body, other than the IRS (i.e. a tax return). It is also important to note that if a taxpayer begins using this policy, they may be required to report a change in accounting method on their tax return the first year it adopts such a policy. Furthermore, the IRS will also allow some taxpayers to deduct purchases greater than the limits mentioned above if the taxpayer can substantiate that it is reasonable to do so considering the size of their business and the frequency and size of regular asset purchases.
Any tax advice expressed in this communication (including any attachments) is not intended to be used, and cannot be used, for the purpose of avoiding penalties imposed on the taxpayer by any governmental taxing authority or agency. In addition, if any such tax advice is made available to any person or party other than the party to whom the advice was originally directed, then such advice, under IRS Circular 230, is to be considered as being delivered to support the promotion or marketing (by a person other than Pine & Company CPAs, PLLC) of the transaction or matter discussed or referenced. Thus, each taxpayer should seek specific tax advice based on the taxpayer’s particular circumstances from an independent tax advisor.