Will Rogers said: “Even if you’re on the right track, you’ll get run over if you just sit there.” When it comes to technology, you can’t afford to stay in the same place; you must continually upgrade your PCs and laptops. One source says you should expect to replace your desktops every four years and laptops even sooner. If your equipment is becoming dated, here’s why now is a great time to do it.
Your old PCs are costing you money
By doing nothing and just sitting on the track (keeping your computers beyond their natural life expectancy), you have increased costs:
- Maintenance. As with any machine, things break. The older the equipment, the more likely you’ll need maintenance. Most small businesses don’t have IT people in house and have to schedule repair times as needed. The cost for this is not only the servicing of the PCs and laptops, but also the downtime for employees using them.
- Reduced productivity. Older PCs and laptops just don’t perform as well as the new ones do. They run slower and take longer to start (boot) up, which impedes the productivity of your staff. They may not be able to support software upgrades, such as new graphics. According to Intel, one old PC can cost your business more than $17,000 a year in productivity.
- Security. Cybersecurity is vital to small businesses, and older machines are more vulnerable to attacks because they cannot support new security hardware, such as facial recognition cams or fingerprint readers.
New computers help you achieve more
Now that you know that older computers may be holding your company back, exactly what can you expect to gain by investing in new equipment? PCs and laptops with the latest Intel processors can help you in a number of ways:
- Work seamlessly across cloud applications. You may be able to work nearly two times better with a new PC powered by the new 8th Gen Intel Core i5 processor versus one powered by an Intel processor that’s five years old (this claim is measured by WebXPRT* 2015 on Intel Reference Platform)*. New computers boot up faster and can multitask (run two or more applications simultaneously).
- Get better battery life for laptops. Your mobile workforce will appreciate being able to work longer without having to carry battery backups. The 8th Generation Intel® Core™ processors provide longer battery life, which effectively enables employees to work all day without recharging.
- Find a form to fit your needs. You aren’t limited to a desktop, which is a computer that’s best suited for accounting, inventory, CRM, purchasing, and sales. You can get big screen all-in-ones suitable for graphic design and communications or thin and light laptops for remote workers and presenters. You may even want to consider two in ones (tablets and computers in one) for your sales staff on the go.
Beyond the direct benefits of upgrading, you may realize some indirect benefits as well. For example, it’s been suggested that better IT helps with employee retention. “Employees who are given the latest technology feel that they are trusted.” In today’s tight job market, engaging employees is essential for retaining them.
Tax breaks for buying new PCs
The sweeping changes made by the Tax Cuts and Jobs Act likely will lower your overall tax bill. If you’re a C corporation, you’ll pay a flat rate of 21% for 2018. If you’re a pass-through entity—sole proprietorship, partnership, limited liability company, or S corporation—you’ll see lower individual income tax rates for your share of business profits. And you may be able to reduce the effective rate of tax on profits through the new qualified business income (QBI) deduction of up to 20%. The net results of tax reform means you may have to pay less taxes, saving you money that can be used now to upgrade your equipment.
And the changes in the tax law enable you to write off the cost of equipment purchases in the first year, whether you finance your purchases in whole or in part. There are several write-off options:
- Section 179 (first-year expensing) deduction. You can elect to expense the cost of equipment placed in 2018 up to $1 million. But to nail down the deduction for 2018, merely ordering computers is not enough. You must have them ready for use in your business.
- Bonus depreciation. You can use another first-year allowance, called bonus depreciation, to write off 100% of your cost. This tax break is automatic unless you choose not to have it apply. If your business is operating at a loss for the year but you determine that new equipment can help you become profitable, then bonus depreciation is a better alternative to the Section 179 deduction.
- Noncapitalized expense. Instead of adding your new computers to the balance sheet, you can opt to treat the cost as a deductible expense. You can elect to write off up to $2,500 per item or invoice (this is an IRS-created “de minimis” rule). This write-off option simplifies recordkeeping.
If you choose to apply your tax savings from rate cuts toward increasing employee compensation or other expenditures and finance the purchase of computers, you can deduct the interest. The new limitation on deducting interest only applies to businesses with gross receipts over $25 million.
Upgrading your old computers now will prove to be cost effective in the long run. You’ll save on maintenance, increase productivity, obtain greater security, and enjoy tax breaks for your purchase. What’s more, there’s the intangible for your team: having the latest and faster computers to work on not only increases productivity but it also boosts morale. Discuss with your CPA or other tax adviser how tax savings can underwrite the cost of upgrading your computers now.
*Software and workloads used in performance tests may have been optimized for performance only on Intel microprocessors. Performance tests, such as SYSmark and MobileMark, are measured using specific computer systems, components, software, operations and functions. Any change to any of those factors may cause the results to vary. You should consult other information and performance tests to assist you in fully evaluating your contemplated purchases, including the performance of that product when combined with other products. For more complete information visit www.intel.com/benchmarks. Performance results are based on testing as of October 2018 and may not reflect all publicly available security updates. See configuration disclosure for details. No product can be absolutely secure.
This post was created in collaboration with Intel. All opinions expressed in this post are my own and not those of Intel.