As we head into the holiday season, it’s not too early to start thinking about your 2022 capital investments. It’s very important to place your large ticket item orders early so that you can accept delivery before the end of 2021 and be able to take advantage of IRS Section 179.
Not sure what Section 179 is or interested to learn more? Simply put, “Section 179 allows taxpayers to deduct the cost of certain property as an expense when the property is placed in service success (IRS Section 179).” Take advantage of accelerated depreciation to reduce your tax liability this tax season with Section 179.
In addition to Section 179: Accelerated Depreciation, there is another tax strategy you can utilize–especially if you had a great year and are flush with cash, as so many medspas did in 2021. This strategy only works if your books are kept on a cash basis. Here’s what you can do:
First, review any ongoing monthly contracts that you plan to keep through the year. Then, attempt to negotiate a discount for prepayment of 12 months of service and pay the entire year prior to Dec. 31. It’s a double benefit between the tax savings, which could amount to 35%, plus a 5-10% negotiated discount.
Of course, it’s important to have a conversation with your accountant before utilizing either strategy to make sure there will be that tax benefit.