IT Insight: How year-end technology tax deductions can improve business

The purpose of Section 179 of the IRS Tax Code is to motivate the American economy, and your business, to move in a positive direction. Businesses no longer see technology as a cost. Instead, IT has become critical to your business success. The tremendous IT budget growth in 2022 is due to changes in business operations (how we do business), support for an increasing remote workforce, and business revenue increases.

The need to upgrade your outdated IT infrastructure is paramount with increased security concerns. There is an ever-increasing priority on IT projects as we enter 2023. These factors should dictate your end-of-year purchases as you plan to do more with less and maximize efficiency. Included in this are real property such as security cameras and surveillance systems, cellphones and phone systems.

One thing you must consider, if you haven’t already, is technology end-of-life. In prior reports, I have indicated the need to update older Microsoft operating systems, namely Windows Server 2012 and Windows 8. The end of extended support for these products is fast approaching. You need to update these systems now to avoid security and compliance issues. It’s also a great time to replace off-the-shelf software, including older versions of Outlook on your server.

Replacing older and more problematic desktops and laptops is a good move before year end. Any Windows 10 computers that are not specified to upgrade to Windows 11 should be replaced as well. Deduct the cost to you of the new and 100% of the depreciation. You can deduct both brand new hardware as well as refurbished if it is “new to you”.

Many companies are keeping their remote office workers, even post-pandemic. Reasons vary from cost and space savings to improved employee morale and productivity. Again, any software that helps to improve communication for employees remotely should be considered now. Consider Microsoft 365 Teams or SharePoint and remote managed software to keep off-premise devices safe and supported.

Best of class video meetings dictate the necessity for upgrades to video conference systems and upgrades to your webcam, microphone, and screens. (See IT Insight re The Owl Oct. 21, 2022). This investment is tax-deductible as well.

Cybersecurity updates and protection from vulnerabilities (phishing, ransomware, etc.) and a comprehensive IT assessment are in order currently. You can address those shortcomings with hardware and software purchases now. What is your Business Continuity Plan?  Backup and Data Recovery, Firewall and Threat Detection, redundant systems such as off-site cloud replication are all part of your IT spend as well as the technical hours and services necessary to implement these.

The IT experts at your managed service provider, such as PCGiT, can provide you with a smart strategy for end-of-year IT purchases and upgrades that will result in improved security, efficiency and productivity.  Keep your business ahead of the game in 2023. Your tax-deductions await!

JoAnn Hodgdon is vice president and co-founder of Portsmouth Computer Group (PCGiT) with her husband David. PCG provides comprehensive managed IT services, business continuity, security, cloud computing and Virtual CIO services to their clients.  You may reach her at joann@pcgit.com or at www.pcgit.com.