BY IBANESSA SOTO HOGAN

IN THE EVER-EVOLVING SPA AND WELLNESS INDUSTRY , savvy owners are keen to optimize their financial strategies . Among various options , Section 179 of the tax code stands out . This underused provision offers significant tax advantages , serving as a key to financial growth for spa businesses .

UNDERSTANDING SECTION 179 : A Financial Lifeline for Spa Owners Section 179 is a vital part of the IRS tax code for spa owners . It allows businesses to deduct the full cost of eligible equipment purchased within the tax year . This encompasses a wide range of assets , from luxurious massage tables to advanced skincare technology .

Qualifying Assets Eligible assets include laser and cool sculpting equipment , massage tables , office machinery , refrigerators , furniture and certain improvements to owned buildings , like roofing and HVAC systems .

l What qualifies for Section 179 ? Most tangible business equipment , like massage tables and computers . l Can leased or financed equipment qualify ? Only if the spa intends to own the equipment at lease end , evidenced by a contract or invoice . l Are there deduction limits ? Yes , with caps at $ 1,160,000 in 2023 ( increasing from $ 1,080,000 in 2022 ) and total equipment purchase limits of $ 2,890,000 in 2023 ( up from $ 2,700,000 in 2022 ). l Is Section 179 an annual deduction ? Yes , it is available each year for small to medium-sized businesses . l What if I exceed my limit ? Excess amounts can be carried over indefinitely . l How does it impact cash flow ? Immediate deductions free up cash for other strategic investments .

Options for Asset Purchase When acquiring these assets , spa owners face two choices : 1 . Depreciation : Spread the cost over five years , reflecting the asset ’ s gradual loss in value . 2 . Full Immediate Deduction : Write off the entire cost in the year of purchase .

The Immediate Benefit : Section 179 Deductions The power of Section 179 lies in its immediate impact . Instead of slowly depreciating assets , spa owners can deduct their full cost upfront . This strategy boosts cash flow and facilitates strategic reinvestments .

Perfect Fit : Section 179 in the Spa Industry Section 179 is tailor-made for spa owners . It enables them to regularly update their equipment , keeping them competitive and enhancing customer experiences while maintaining a healthy bottom line .

42 PULSE n JANUARY / FEBRUARY 2024