One of the most common financial mistakes small businesses make is overlooking key, money saving tax deductions. Section 179 is a tax deduction allowing businesses to write-off up to $500,000 in qualifying equipment purchases made in 2013.

1. Smart
Deductions
for
Small
Business
Best End-of-Year Tax Tips to
Save Your Business Money
Digium, Inc. • Barbara Weltman

2. A small business cannot afford to miss an
opportunity to save money.
Yet one of the most common
financial mistakes small businesses
make is overlooking key, money
saving tax deductions.
Section 179 is a tax
deduction allowing
businesses to write-off up
to $500,000 in qualifying
equipment purchases
made in 2013.
This special deduction is set to
drastically decrease next year,
making it imperative that businesses
take full advantage of it in 2013.
The Section 179 Tax Deduction is a
deduction that can be particularly
beneficial in helping businesses afford
IT projects, such as replacing legacy
phone systems with upgraded
business communications solutions.
Because some equipment can also
be leased, it can mean an even
greater total savings on year-end
communications purchases.
Barbara Weltman was a
featured guest expert in a
webinar, “Smart Deductions
for Small Businesses,”
sponsored by Digium, Inc.
Big Ideas for
Small Business, Inc.
Attorney and advocate
of small businesses
for over 30 years:
2013 Small Business
Influencer Champion
Publisher of Big Ideas
®
for Small Business
®
and Idea of the Day at
www.barbaraweltman.com
Blogger:
SBA.gov; Small Biz Trends
Guest columnist:
The Wall Street Journal,
U.S. News and World Reports,
and Entrepreneur.
Author:
J.K. Lasser’s
Small Business Taxes (Wiley)

3. Key findings in
Balboa Capital’s survey of
small business owners:
45
47
% are not familiar
with Section 179
% have elected to take
54
45
the Section 179 Tax
Deduction in years past
% plan to use the Section 179
Tax Deduction in 2013
Successful businesses take advantage of legal
tax incentives to help lower their operating costs.
The Section 179 Deduction is a tax incentive that is
easy to use and gives businesses an incentive to
invest in themselves by adding capital equipment.
In short, taking advantage of the Section 179
Deduction will help your business keep more capital,
while also getting needed equipment, vehicles, and
off-the-shelf software.
% will invest in up to
28
$50,000 worth of capital
equipment in 2013
% will finance equipment
in 2013, 17% will apply for
a bank loan
You should contact your tax advisor to learn about the specific impact to your business.

4. How Section 179 Works
When your business buys certain items of equipment, it
typically gets to write them off a little at a time through
depreciation. In other words, if your company spends
$50,000 on a machine, it gets to write off $10,000 a year
for five years (these numbers are only meant to give you
an example). Now, while it's true that this is better than no
write off at all, most business owners would really prefer
to write off the entire equipment purchase price for the
year they buy it.
In fact, if a business could write off the entire amount,
they might add more equipment this year instead of
waiting over the next few years. That's the whole purpose
behind Section 179—to motivate the American economy
(and your business) to move in a positive direction. For
most small businesses (adding total equipment, software,
and vehicles totaling less than $500,000 in 2013), the
entire cost can be written-off on the 2013 tax return.
Basic year-end strategies
Assess whether you
are profitable
■
■
■
Check your P&L statement
through November
Make projections for December
Talk with your tax/financial
advisor about your numbers

5. Business Equipment
Under Section 179, businesses may write-off up to
$500,000 on qualified equipment purchases and leases
of up to $500,000 in 2013. Businesses that exceed the
threshold of $500,000 in capital expenditures can take a
Bonus Depreciation of 50% on the amount that exceeds
the above limit. The equipment must be placed into
service between January 1 and December 31, 2013.
If a business is unprofitable in 2013, and has no taxable
income to use the deduction, that business can elect to
use the 50% Bonus Depreciation and carry-forward to a
year when the business is profitable.
Basic year-end strategies
For profitable businesses:
Cash basis:
■
Defer income
■
Accelerate deductions
■
Decide on year-end bonuses
■
Make equipment purchases
■
Set up qualified retirement plans

6. Tax Code Section 179
and Election to Expense Detail
The election, which is made on Form 4562, is for the tax year the
property was placed in service or an amended return filed within
the time prescribed by law. Section 179 property is property that
you acquire by purchase for use in the active conduct of your
business. To ensure property qualifies, reference Section179.org.
This expense deduction is provided for taxpayers (other than
estates, trusts or certain non-corporate lessors) who elect to
treat the cost of qualifying property as an expense rather than a
capital expenditure. Under Section 179, equipment purchases,
up to the amount approved for a given year, can be expensed
(deducted from taxable income) if installed by December 31st.
Non-tax leases qualify for this deduction in their year of inception.
Any excess above the expensed amount can be depreciated
depending on the equipment type. Not all states follow federal
law. Contact your tax advisor for further details or visit
www.irs.gov for specific details.
Basic year-end strategies
If your business expects
losses for the year:
■
Get ready to claim a net operating
loss (NOL) carryback
NOLs generate cash flow
to help your business

7. Looking ahead
Plan now for 2014
Fix your budget
Get health coverage settled
Watch for extensions of expiring laws
Watch for new taxes that could come from
the bi-partisan budget committee (report due
December 13 but likely to be delayed)
Frequently Asked Questions (FAQs)
Do phone systems qualify?
Yes, Switchvox business phone systems qualify, including
the IP PBX, handset phones, routers, etc. However, costs
for subscription and maintenance are not included in the
Section 179 deduction.
Does the equipment have to be installed in the U.S.?
Yes, the equipment must be placed into service within
the United States.
Does my business have to be profitable in 2013?
No, even businesses that are not profitable in 2013 qualify
for tax deductions.
Call us today and get a free consultation on your business
phone system needs! Call 256-428-6262 or 1-877-344-4861.
Act Now!
Acquire and put your
business equipment
to use before
year-end! Interested
in learning more?
We’ll provide you with
a free consultation
and extend finance
solutions so you can
acquire the business
equipment you need.
Contact us today!
Call 256-428-6262
or 1-877-344-4861.

8. Digium , Inc.
®
Digium, Inc. provides Asterisk® software, telephony hardware,
and on-premises and hosted Switchvox business phone
systems that deliver enterprise-class Unified Communications
(UC) and UC as a Service (UCaaS) solutions at an affordable price.
A community of more
than 80,000 developers
and users worldwide
uses Asterisk to create
VoIP communication
solutions in more
than 170 countries.
Switchvox . Enterprise-class features
at a price you can afford.
®
Digium is the creator, primary developer and sponsor of the
Asterisk project; the world’s most widely used open source
communications software. Asterisk turns an ordinary computer
into a feature-rich communications server.
Since 1999, Digium has empowered developers to create
innovative communications solutions based on open standards
and open source software, providing an alternative to proprietary
phone systems. Digium Switchvox Cloud and other cloud-based
products and services are offered through Digium Cloud Services,
LLC, a wholly owned subsidiary of Digium, Inc. Digium’s business
communications products are sold through a worldwide network
of reseller partners.
www.digium.com • www.asterisk.org
In an effort to provide a similar solution
accessible to everyone, Digium offers
Switchvox — a full Unified Communications
solution, built on the power of Asterisk.
Switchvox is a business phone system specifically
developed for small- and mid-sized businesses
and organizations that want the power of the
open source Asterisk solution, but without the
need for custom development skills for
installation. The advanced features, ease-of-use,
and simple out-of-the-box setup make Switchvox
an ideal solution for organizations with limited
technical staff.
A full-featured UC solution, fueled by the
innovation of open source technology and open
standards, Switchvox allows users to integrate
their phone system with their existing networks
and get all of the advanced features they need at
a price they can afford. Most importantly, by using
Asterisk open source software as the foundation
for Switchvox, Digium is able to provide a
communications system with superior capabilities
for a fraction of the cost of proprietary systems.
Digium’s Switchvox solution delivers UC features
everywhere you need it: on-site, in the cloud, and
with mobile. www.digium.com/switchvox

9. www.digium.com • www.asterisk.org
Digium®. We’re changing the way businesses communicate.
Founded in 1999, Digium is the creator
and primary developer of Asterisk,
the industry’s first open source
telephony platform. More than one
million customers in 125 countries have
deployed Asterisk-based systems.
Digium is committed to ending the
days of expensive, proprietary telecom.
The Switchvox family of Unified
Communications solutions is built on
Asterisk and is designed to provide
enterprise class features at affordable
prices for small and medium businesses.
The award-winning line of Switchvox
IP PBX phone systems provides more
than a phone system—it delivers a
Unified Communications platform
that integrates multiple features that
increase productivity and lower monthly
communication costs. It’s the affordable
solution with a proven return on
investment for businesses
with 10 to 600 users.
Learn more at digium.com/switchvox
Copyright © 2013 Digium, Inc. All rights reserved. Digium, Asterisk and Switchvox are trademarks of Digium, Inc.
All other trademarks are property of their respective owners. 2013 18 Dec.
Want more information
on Switchvox?
Take a virtual tour of
this powerful Unified
Communications platform:
www.digium.com/switchvox
Contact us —
we’re here to help.
Talk with a Switchvox specialist:
1 877 344 4861
1 256 428 6271
sales@digium.com