While many of us may not physically see our servers as often as we see our personal terminals, we interact with them directly or indirectly daily. Within your office network, the server is the heartbeat of the entire system. Since we rely on them without directly interacting with them we tend to forget that they’re there. However, just like with any other type of computer, servers can expire and need replacing from time to time. Have you checked your servers lately? It may be time to upgrade them.
Section 179 Deductions
For those who read our blog last week, you’ll recall that our topic was Section 179 tax deductions. As a quick recap, this is a section of the tax code that not only allows you to write off purchases made for business purposes. It will let you take the full value at one time versus the past option of making you deduct a depreciated percentage over multiple years. While it doesn’t give you credit for the total cost of your business investments, it does allow you to legally avoid paying tax on the funds used for these purchases.
The purpose behind Section 179 is to give businesses a break when they are just starting out or are expanding. Therefore it allows them a chance at making a profit (or at least avoiding too much of a loss) while making major purchases. While the total amounts are subject to change, the law currently allows write-offs of up to $1 million for single purchases and a maximum of $2.5 million total per year. This incentive is attractive to even established businesses that need to keep up with technology.
As always, we need to remind our readers that we are not tax experts and this information should not be taken as the final word. Every business and situation is unique, so please consult your company’s CFO or other tax and accounting professionals before making any decisions or purchases.
Are You Ignoring Your Servers?
As we mentioned earlier, your servers can be an “out of sight, out of mind” affair. However, if you’re working on an internal network, including remotely, you are likely interacting with one or more servers throughout most of the day. Just like with terminal computers, they are subject to a finite lifespan. They can become either obsolete or just wear down. This causes several potentially critical problems for your business. For instance; network speed might become an issue. This affects how quickly information travels to and from the server and your computer or between users of the network itself.
In addition, storage becomes difficult to access. While servers typically have much more capacity than the average desktop or laptop, that isn’t to say that it’s unlimited. Remote storage and data back-up are becoming increasingly popular these days. But that’s not to say that there aren’t situations where it would be preferable or necessary to stick to a local, physical server. For example, if your office deals with sensitive medical information you’ll need to remain HIPAA compliant. Cloud storage may not be a safe choice for you. That means you’ll have to be extra diligent about keeping your on-site servers and back-up systems healthy.
Backups Don’t Last Forever
Many of us remember when we first used floppy disks or CDs for our computers. We thought they would outlive us — only to have our expectations dashed with corrupted data after just a few uses. Back-up systems in any form have their limitations. Remember that magnetic tapes became demagnetized or servers got an unexpected electrical charge. You may be using a back-up drive or a physical format. Either way, you are archiving information that needs to be stored indefinitely. And that means you’ll need to plan to transfer that data to another form of storage every 5-10 years depending on technological advancements.
There is a fairly new medium called M-Discs that, due to their unique material and technology, are reported to keep data safe for 1,000 years. While that may be theoretically possible, try to convince the horde of dads who bought those 100-year lightbulbs for $40 apiece only to have them burn out in about a year! Remember that no matter what the company selling to you may say, nothing is permanent. If your data is worth keeping, it’s worth transferring every few years.
With that in mind, as the year comes to a close, perhaps this would be a good opportunity to look over your current equipment and see where you stand. If you can’t find any records to tell you the age of the drive, check to see when the first files were transferred. This is a good place to start and at least should you a good estimate.
Now’s the Time to Upgrade Your Servers!
Remember that both servers and back-up devices are important elements of many pieces of equipment that need to be updated and replaced at some point. If you’re coming to the end of 2020 and finding that you had a better year than expected take advantage of Section 179 deductions. You can lower your tax liability while making business-critical equipment upgrades.
You’ll never know what tomorrow will bring, let alone next year or the year after. It’s impossible to predict if you’ll have the funds when the servers or backups fail. Or you may simply not have the time to address the issue. By upgrading your equipment while we’re still in tax year 2020, you’ll be setting yourself up for success for next year and possibly the years ahead!