Within the realm of office networks, servers play a crucial role as the backbone of the entire system. Even though we may not directly interact with them as much as with our personal terminals, our daily activities are dependent on them, either directly or indirectly. It’s important to keep in mind that, similar to any other computer, servers have a finite lifespan and may require replacement over time. Have you recently assessed the status of your servers?
Section 179 Deductions
As we have discussed in our previous blog posts, Section 179 tax deductions offer significant benefits to businesses. This particular section of the tax code enables businesses to deduct the full value of eligible purchases made for business purposes, as opposed to spreading the deduction over multiple years. While it does not provide a complete credit for the entire cost of business investments, it does provide a legitimate means to avoid taxation on funds used for these acquisitions.
The intention behind Section 179 is to support businesses during their initial stages or expansion, granting them an opportunity to turn a profit or reduce losses while making substantial investments. Presently, the law allows for write-offs of up to $1 million for individual purchases, with a maximum total deduction of $2.5 million per year.
As always, it is essential to emphasize that we are not tax experts, and this information should not be considered definitive advice. Each business and its circumstances are unique, so it is advisable to seek guidance from your company’s CFO or consult tax and accounting professionals before making any decisions or purchases.
Are You Neglecting Your Servers?
While servers may remain unnoticed in the background, they play a vital role in your daily operations, especially if you work within an internal network. Similar to terminal computers, servers have a limited lifespan and can become obsolete or experience wear and tear. This can lead to critical issues for your business, such as reduced network speed, affecting the efficiency of data transmission between the server and computers, or among network users.
Furthermore, storage accessibility can become problematic. Although servers typically offer more capacity than standard desktops or laptops, they are not infinite. While cloud storage and data backup solutions are gaining popularity, certain situations may necessitate the use of local physical servers, particularly for industries dealing with sensitive information that require HIPPA compliance. In such cases, maintaining the health of on-site servers and backup systems becomes paramount.
Backups Have a Limited Lifespan
Backup systems, regardless of their format, have inherent limitations that need to be considered. Magnetic tapes can become demagnetized, and servers may experience unexpected electrical issues, leading to data corruption. Whether you use backup drives or physical media, it’s crucial to understand that if you are archiving information meant for long-term storage, you should plan to transfer that data to another form of storage every 5–10 years, depending on technological advancements.
While newer mediums like M-Discs claim to keep data safe for an extended period, it is essential to remain realistic about the permanence of any storage solution. Even if a company advertises long lifespans, no data storage method is truly permanent. If your data holds significant value, periodic data transfers to updated storage options remain necessary.
Now is the Right Time!
Both servers and backup devices are critical components of your infrastructure that require periodic updates and replacements. As the year comes to a close, it is advisable to assess your current equipment’s status and determine if any upgrades are necessary. If you found unused funds or experienced better-than-expected financial performance in 2019, leveraging Section 179 deductions can be a strategic way to lower your tax liability while investing in business-critical equipment upgrades.
The future is uncertain, and unforeseen circumstances can arise at any time. By upgrading your equipment within the 2019 tax year, you position your business for success in the coming years. Take advantage of the available deductions and invest in the reliability and efficiency of your network infrastructure.
