IRS Tax Advantages and Vending Machines

If you decide to go into business for yourself, you may want to consider going into the vending machine business. Aside from the initial start-up capital to purchase the vending machines and their related expenses, there is very little else to do in terms of maintenance. It is not as labor-intensive and capital-intensive as some other types of businesses and it requires little technical knowledge.

In addition, having a vending machine business allows you to become your own boss, the prime reason most people venture into their own business. So if you go into the vending machine business, there are some tax advantages that would apply to you as they would any other business owner.

Section 179 of the Economic Stimulus Act 2008 allows you to acquiring new vending machines (and other tangible goods) and write-off the entire investment. IRS Section 179 may allow a write-off for new equipment (for the tax year in which the equipment is put in service) purchased for business purposes.

Another tax advantage is when you use a part of your home as your business office. You can deduct some or all of the expenses of your office at home and related expenses under the Home Business Deduction provision. To qualify for this deduction, your home office must be the principal place where your business is done. This means that portion of your house must be used exclusively for business purposes. Some parts of your house would likely be unsuitable to qualify as your home office, like your kitchen for example. To fulfill this requirement, set aside a room as your home office. This will keep you on the safe side should the IRS ever questions your home office use.

Also, when you buy an asset like a vending machine or new computer, you offset that cost against your profit for that year. This means that if you bought $50,000 in vending machines and your turnover was also $50,000 that same year, your tax bill would be zero.
When it comes to assets like vending machines, depreciation allows you to offset the dollar value in the usefulness of the machines. So if your vending machines can last you ten years, you can depreciate the assets by deducting their loss of value over those years. For instance, if your vending machines cost you $50,000, your machines may depreciate by $5,000 each year – which you can offset against your tax bill over ten years. This presents further savings on taxes.

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