|By Farid Parvini Ph.D. | Solution21 | CEO|
As we wind down 2017, most companies are already looking ahead to 2018 and the dreaded tax season that casts its dark shadow over the first of the year. As you scramble to find extra write-offs and ways to lower your corporate tax burden, you could be overlooking a helpful deduction that you might otherwise set aside for the next year. Continue reading to learn about an important elective expensing deduction that may apply to your unfinished website – even if it hasn’t gone live yet.
Section 179 Property
In Section 179 of the U.S. tax code, there is an allowance for deduction of specific types of property as an expensible item. That means it does not have to be capitalize or depreciated over several years. This is often referred to accelerated depreciation, as it allows for full realization of the tax deduction in the short term.
According to the IRS, only ‘qualified property’ is eligible for a Section 179 deduction. To qualify, the property must be actively used for business purposes and put into service the year the deduction is taken. This could cover many different items, from computers to vehicles.
Most business owners recognize Section 179-qualifying assets as tangible, physical items. However, the tax code does allow for accelerated depreciation of certain types of off-the-shelf software, such as sites developed with WordPress. In other words, if you pay and are working on a new WordPress site but will not go live or completely finish the website until after the first of the year, you may still qualify for a deduction on this year’s taxes.
Start Your Website Now for Early Tax Benefits
Between the end of the calendar year and the holiday season, you have a lot on your plate. If you are planning to focus on your marketing efforts and launch a new site at the first of the year, it could pay to at least get started now. For business owners who expect a big tax bill in 2018, paying for part or all of a new WordPress website could help you qualify for a Section 179 tax deduction.
Keep in mind that there is a limit to the amount of elective expensing you can accomplish under Section 179. Currently, the cap is $500,000 in deductions. Considering the average cost of a quality website is a tiny fraction of that limit, staying within that boundary should be no problem at all. In fact, your company could probably build between 40 and 50 websites before reaching that limit, which is probably more websites than the average business is interested in building.
If you are planning to launch a new website in 2018, talk with your tax professional to find out more about Section 179 deductions and whether it could be beneficial to begin your project before the ball drops on December 31st.
Other Ways a New Website Could Benefit Your Business
In addition to tax benefits, a new website could also be an advantage in your business’s online marketing efforts. By getting an early start, you give your company time to establish a modernized and professional design that highly responsive for mobile users and also designed to optimize the user experience. Ultimately, your company website is the apex of your digital marketing efforts and the place where you are able to convert visitors into paying customers. Before you start any type of paid advertising or email marketing, you should be organized and equipped to make a strong impression and navigate the flow of your traffic.
This is the time to evaluate your landing pages and assess the usability and navigation of your site. It is also a good time to re-read the content on your site and update it with a strong, positive, and professional message that reflects the goals, vision, and atmosphere of your business. We suggest working with a professional content writer to filter and improve your message and help you appeal to your target market once your site goes live.
Yes, all of this may take time, but it will be well worth the effort. Not to mention, you may be able to expense your website on this year’s taxes even if you aren’t finished with it by year’s end.