Section 179 IRS Tax Deductions

There is an important tax opportunity that is currently available that will be going away after December 31, 2010. This is an opportunity that all shippers may qualify for if they act now.

Normally all off-the-shelf software purchases, like Harvey Software’s CPS shipping software. must be depreciated over a 36-month period, but there are some important exceptions that end December 31, 2010. Off-the-shelf computer software purchased from January 1, 2003 to December 31, 2010 is eligible for an IRS Section 179 deduction, which means that 100% of the cost of software can be deducted in the year purchased. Starting in 2011, you will no longer be able to use Section 179 deductions for off-the-shelf software.

Most off-the-shelf shipping software meets all the basic requirements for this deduction as it is readily available for purchase by the general public, it is subject to a nonexclusive license, and it has not been substantially modified.

This means that you could purchase new shipping software now and then expense 100% of that cost this year. Naturally, as with any tax deduction, you will need to consult your tax advisors to know how it fits your company.

Below are some Q&A type details we understand about IRS Section 179 Deductions:

What is the Section 179 Deduction?

Essentially, Section 179 of the IRS tax code allows businesses to deduct the full purchase price of qualifying equipment purchased or financed during the tax year. That means that if you buy (or lease) a piece of qualifying equipment, you can deduct 100% of the purchase price from your gross income. It's an incentive created by the U.S. Government to encourage businesses to buy equipment and invest in their businesses.

What Software Qualifies?

For basic eligibility, the software must meet all of the following general specifications:

1. The software must be purchased outright by the company that uses it.
2. The software must be used in your business or income-producing activity.
3. The software must have a determinable useful life.
4. The software must be expected to last more than one year.

Off-the-shelf computer software placed in service during the tax year is qualifying property for purposes of the section 179 deduction.

To learn more about purchasing CPS visit http://www.HarveySoft.com or call 800-231-0296 today.

Using Free Shipping to Make More Sales

The world's largest retailer has just offered free shipping on almost 60,000 items through December 20th with no minimum order. This means free shipping offers are definitely on the mind of consumers for the holiday season. Rival companies offer free shipping with a minimum order or when ordering certain items, so let's look at the "free shipping" offer marketing strategy.

Use free shipping offers to gain business, not just give away the shipping cost. It's a profit and sales tool, not a giveaway. And there's more to it than just posting "FREE SHIPPING". Generally, the best return from a free shipping offer is when it's matched to consumer products and services such as current products that have caught consumers' interest. Overstock merchandise sales do not benefit as much with free shipping offers. Also, a constant free shipping offer can reduce its success. Offering free shipping for a limited time typically provides better results.

Many articles have been written about how shipping cost "sticker shock" directly causes abandoned shopping carts and lost orders. Even when the total of the items and the shipping represent a great value, some consumers lose sight of the quality of an offer and will not purchase if they consider the shipping cost to be too high.

If your company plans to jump onto the free shipping bandwagon, your shipping system may be able to help you decide when you can offer free shipping. Our CPS shipping software provides a report that shows your average cost to ship each package by each carrier and service. Since your company's shipping data is used for this, you have the data you need to determine if you can offer free shipping on every order, on orders over a certain amount, on orders for certain product types, etc.

Or, if a free shipping offer might not work for your company, consider a "flat rate" shipping offer. You can use this same report to establish your flat rate shipping cost "break even" price and use the report data to decide about your flat rate shipping offer.

Both of these strategies help fight lost orders due to a shipping cost surprise. Whichever you decide to use, make sure it's plainly offered at your web site. Make the process easy and help your customer click "Buy" instead of "Bye".

It's Not Too Late to Use the USPS As Part of This Year's Shipping Strategy

Not yet using the Post Office as part of your shipping strategy? It's still not too late to get started. Consider these points when you are looking at the savings you might realize shipping with the post office.

Immediate Discounts When Using On-line Postage

What's a quick way to get discounts on your Post Office shipping? That's easy. Make sure your shipping system uses Internet postage. When you ship with the Post Office and use Internet postage, you can save anywhere from 5% to 13% depending on the USPS service(s) you use. Save 5% off of retail Express Mail® rates and up to 13% off of retail rates on Priority Mail shipments. For International shipping, you save 5% on Priority Mail International shipments and 8% on Express Mail International. And you receive these savings along with the convenience of printing the postage directly on the shipping label. When the label is printed, you are done! What could be easier? A shipping system like our CPS shipping software can do this all automatically, including rate shopping between carriers, for you.

Free Packaging

The Post Office provides free packaging for their Priority and Express services. There are over 20 types of free packaging for Priority Mail shipping, divided into boxes and envelopes for their flat rate services, and boxes and envelopes for general shipping. For Express Mail, there are envelopes and a special Express box.

You can't use these boxes for every package, but when you can use it can add up to real savings! You can even order supplies on-line.

Then There Are the Items Where the Post Office Just Says "No!"

No fuel surcharge
No residential delivery surcharge
No remote/extended area delivery surcharge
No address correction fees

Use the Post Office, and you just say "No!" to these extra cost items, too.

Exclusive Delivery Options

Many carriers can deliver to domestic and international businesses and residences. The USPS is the only carrier that also delivers to Post Office boxes and to military (APO/FPO) addresses.

If the Post Office looks like it's good for your company, you can sign up immediately to start shipping with Internet postage. Shipping systems like CPS are compatible with Internet postage too, so you can get started fast! For more information about CPS, visit http://www.HarveySoft.com.

3 Details to Watch for Your Holiday Shipping

Let's take a quick look at some details to consider about a few aspects of operating your shipping department. Watching these shipping details can put more money on your bottom line and help you with better package delivery for your customers.

Box Size and Dimensional Weight

Your carrier invoice can be a real surprise if just a few packages are rated with dimensional weight instead of actual weight. It might not break the bank, but when your company closely watches expenses, it's good when there are no surprises. Lighter, larger boxes can be subject to dimensional weight charges, so "a big box full of feathers" can definitely cost more to ship than the actual weight of the package. Some shipping systems, such as Harvey Software's CPS(TM) Shipping Software, have a box type database to let you set up a box code for every size box you use. Getting accurate dimensions is as easy as entering the box code type. The "box types" feature easily makes dimensional weight shipping accurate.

Also to watch for - Carriers have already announced a change for next year in the dimensional weight calculation factor that could make this apply to even more of your packages. Even if all carriers do not do this in 2011, it's good to be ready for dimensional price checking now.

Another Billing Surprise

Another way to avoid surprise charges on your carrier invoice is to make sure residential packages use the residential delivery service when they are shipped. How to avoid the residential surcharge as an unexpected cost? You could use the post office for every package. Or, you could always ship with the residential service regardless of destination. But each of those might cost you more than you want. Solve this problem (with some additional benefits) by using address verification that also checks the commercial or residential address classification. This can be done in your order system or, in a shipping system like CPS, right at the shipping station. Use the right service cut unexpected carrier bills.

One more advantage of address verification is you can also cut address correction fees. One CPS user told us they eliminated $120 of weekly address correction fees when they added address verification to their CPS, and an accurate delivery address improves service for every customer - a real "Win-Win!" Use address verification and you can start these savings today.

The Fuel Surcharge Roller Coaster

Fuel surcharges are now a fact of life with most carriers except the post office. For example, CPS includes this surcharge, but make sure your shipping system is set to use the most current surcharge amount since it changes monthly. These surcharges are easily 5 per cent or more of your carrier bill, and that's a lot to lose track of on your bill and if you do rate shopping. Look for fuel surcharge amount changes around the first Monday of each month and avoid this billing surprise.

Summary

A shipping system with rate shopping is great, but it does not consider all of these items that can affect your shipping cost, it's easy for automatic rate shopping to automatically choose the wrong carrier. Remember, where it's expensive to use one carrier could be the best rate for your company with another carrier. Use good information for the most accurate rates and you take a giant step to "No Surprises."

These tips will help with your shipping all year, not just the holidays. Turn these processing steps into shipping habits and you will add another building block to a solid shipping operation.