Monday, May 19, 2008

Trends: Economic Stimulus Bill of 2008 May Mitigate Recessionary Effects in the SMB Software Market

On February 13th, 2008, President Bush signed the Economic Stimulus Act of 2008 (H.R. 5140) and in it were 2 provisions that directly impact SMB's:
  • "Bonus deprecation". Enables companies with investments in tangible property, computer software, computer equipment, and even improvements to lease property to accelerate their depreciation from a normal 5 year scale to the first 50% being depreciated the first year. However, the asset must be put into use in 2008.
  • "179 deduction increase". The level of these 179 deductions used to be limited to a $500,000 annual purchase of productive capital with a $125,000 deduction limit. they've raised this now to a $800,000 annual qualifying equipment purchase (not including buildings, but including capital equipment like computer equipment and software) of up to $250,000.
The bottom line
SMB's such as sole proprietorships, partnerships, and corporations will truly benefit from this opportunity to both invest and deduct in computer software and hardware. In fact, several large software companies have already sent out targeted SMB campaigns reminding businesses of these incentives. The trick is to have the software deployed by 2008, so businesses will want to make sure they start their implementations early Q4 (October 2008). Vendors who haven't targeted companies yet with this campaign should jump into the act soon!

(The personal contents in this blog do not reflect the opinions, ideas, thoughts, points of view, and any other potential attribution of my current, past, or future employers.)
Copyrighted 2008 by R Wang. All rights reserved