Is It Time For a Server Upgrade?
While many of us may not physically see our servers as often as we see our laptops, we interact with them 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 computer, servers can expire and need replacing from time to time.
Section 179 Deductions
Section 179 of the tax code allows you to write off purchases made for business purposes. It will let you take the full value at one time versus forcing you to deduct a depreciated percentage over multiple years. It doesn’t give you credit for the total cost of your business investments. But, 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 starting out or expanding. Therefore it allows them a chance to make 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.
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 situation is unique, so please consult your company’s CFO or accounting professional before making 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 (even if you are remote) you are likely interacting with one or more servers throughout the day. So how do you know if it’s time to upgrade your server?
Just like with terminal computers, they have a finite lifespan, either becoming obsolete or just wearing down. This can cause several potentially critical problems for your business. For instance, network speed might become an issue. This can affect how quickly information travels to and from the server and your computer or between users of the network itself.
In addition, storage can become difficult to access. While servers typically have much more capacity than the average desktop or laptop, it’s not unlimited. Cloud storage and data back-up are becoming increasingly popular these days. But, that’s not to say 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 HIPPA compliant. So, cloud storage may not be a good 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. Back then we thought they would outlive us. We soon found out that wasn’t the case and the data often became corrupted after just a few uses.
Back-up systems in any form have their limitations, such as magnetic tapes becoming demagnetized or servers getting an unexpected electrical charge. Whether you’re using a back-up drive or a physical format, you need to understand those limitations and plan for them. If you are archiving information that needs to be stored indefinitely, you should 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 each 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, don’t worry. Start by checking to see when the first files were transferred and at least that will give you a good estimate.
Now’s the Time to Upgrade Your Server
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, or have unused funds sitting around, take advantage of Section 179 deductions so that 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 simply don’t 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.
If you have any questions on Section 179 deductions, consult with your tax professional. And if you need help planning your technology purchases call Innergi at 321-275-5580. Our team of consultants will be happy to evaluate your IT needs and put together a plan that will work for you.