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Section 179 Deduction Tax Benefits for Distributors & Wholesalers

Jun 16, 2022

With inflation continuing to ripple through distribution processes from sourcing and shipping to overall workforce activities, distributors and wholesalers need ways to counteract these costs and reclaim margins.

We’ve spoken previously about utilizing enterprise distribution software to maximize company-wide user productivity as a means of controlling internal expenses. This topic has generated a lot of interest and resulted in many questions around the topic of ERP software and ROI. In addition to the daily productivity increases and the process cost savings inherent with ERP software implementation, did you know that your ERP software purchase can also help you reduce year-end tax obligations?

While this sounds like it’s “too good to be true,” it really is an extraordinary benefit of which you can take advantage this year!

What is the Section 179 Deduction?
Section 179 of the IRS tax code allows businesses to deduct the full purchase price of qualifying software and/or equipment purchased or financed during the tax year. That means that if you buy (or lease) qualifying new and used equipment and enterprise software, you can deduct the purchase price from your gross income. It’s an incentive created to reward businesses that invest in themselves. By opting to not use the deduction, companies have to amortize the write-off over the useful life of the purchased asset.

How Do Small Businesses Benefit from Section 179?
Section 179 is especially appealing to small businesses as it provides the ability to deduct the full investment price of equipment or software before paying off loans. Having immediate access to software and equipment enables distributors to start earning a profit and maintain healthy working capital. Utilizing Section 179 allows established businesses to invest their tax savings to facilitate growth, hire new employees, and more. For newer businesses, it reduces barriers of entry for acquiring equipment and software to get up and running sooner.

How Much Can Be Saved?
It all depends on how much is claimed. The current deduction limit stands at $1,080,000 for software investments made in 2022. This certainly makes software and equipment purchasing decisions a lot easier.

What’s the Deadline?
It’s no secret that ERP distribution software requires planning before go-live. With 6 months remaining in 2022, now is the time to make the decision to grow your business. To take advantage of the Section 179 deduction, new software purchases need to be implemented prior to year’s end.

Are you are actively researching ERP software and E-Commerce to improve your company’s productivity, sales, and margins? Speak with your tax professional about the Section 179 deduction and contact us today to discuss the features and timeframe needed to start saving with ERP-ONE distribution software.

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