Renovating? Know the New Expensing Rules

Two changes in the new tax law that affect small businesses

Planning to refurbish your displays and racks, add new fixtures? You’ll want to be up-to-date on the rules for certain write-offs. With the passage of the tax reform bill (aka Tax Cuts and Jobs Act of 2017), certain Section 179 and bonus depreciation rules and limits have changed.

The Section 179 deduction, which allows businesses to write off equipment purchases as expenses in the first year, has been set at $1 million for 2018 and beyond, up from $500,000 in 2017. In past years, Congress often set the new limit very late in the year, and only for a year or two at a time, which made planning difficult. Now storeowners can make their purchasing plans knowing ahead of time what the expensing limit is. The deduction, which covers equipment such as store fixtures or displays, new software and improvements to a leased retail space, also now covers a new roof, HVAC, and a fire or security system. (Check with your tax accountant for details.) Starting in 2019, the deduction will be indexed for inflation.

The Tax Act also increases first-year bonus depreciation through 2022 to 100 percent, up from 50 percent. (After that it gradually reduces, phasing out completely by 2027.) And you can now use the bonus depreciation for new or used purchases; previously it was only for new equipment. To qualify for bonus depreciation, listed items must be used more than 50 percent of the time for business. Starting in 2018, computers are no longer listed property, which means that you can use bonus depreciation for purchasing a computer that you use less than 50 percent of the time for business.


Retailers Adopt Curated Subscription Services

Shoppers love personalized experiences. Here’s how some stores are responding.

Curated subscription services—regular shipments of curated items—have been a hot trend in the last few years. And now they’ve jumped over from online merchants like BarkBox (dog items) and Birchbox (makeup and beauty) to traditional retailers. Gap launched BabyGap OutfitBox, with new outfits for growing babies, and Hasbro Gaming Crate will send customers a new set of creative board games—family and party versions—every three months.

What customers like about subscriptions, a study by Crimson Hexagon found, is the element of surprise and excitement (“made them feel it was like Christmas morning”), the idea of a stylist or other “expert” curating selections around their personal tastes, and the convenience. For dance stores, it’s not impossible to imagine that regular customers might enjoy the convenience of subscribing to a regular shipment of tights, with a little bonus surprise tucked in to add the discovery or excitement element. What else might work? Take a look at these services and others like Stitch Fix, which has a personal stylist handpick pieces for you, and get inspired about how personalized subscription services might fit with your business plan.


Is Online lending safe?

Small Businesses want to know

For cash-strapped businesses, online lending is a fast-growing source of capital. “While traditional banks are still a primary source of funding for small businesses,” reports Small Business Majority, “online lending is increasingly a major source of credit particularly for smaller firms,” with 26 percent of small firms (compared to 21 percent of large firms) that were applying for credit turning to online lending. It’s not surprising, then, that small-business owners want to be sure the lenders are operating in a safe and responsible way. In a survey by Greenberg Quinlan Rosner Research for Small Business Majority, 74 percent of respondents felt that while online small-business lending had opened up new sources of capital for small businesses, these lenders should be regulated to ensure small-business borrowers are protected from predatory practices. Eight in 10 business owners said they were in favor of regulating online lenders to ensure interest rates and fees are clearly disclosed to borrowers, while 3 in 10 agreed they should be “much more closely regulated.”

When asked to rank factors they take into account when applying for a loan, in order of importance, the small-business owners responded: getting the best rate, followed by a tie between the speed of obtaining a loan and the ease of application. Online lending is clearly filling a need for businesses, so it makes sense they want it to be safe.


Thinkstock; courtesy of Stitch Fix; courtesy of Birchbox; Thinkstock

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