Commercial Printing 2018: What to Expect from the Industry

With minimal growth and a shift towards digital media, how can commercial printing adapt?

The once dominant industry of commercial printing has been on the decline over the last several years, and with the adoption of new digital technologies, many fear the commercial printing industry as we know it could be obsolete within the next few decades.

Industry reporting firm Idealliance reported that the commercial printing sector grew by 1% in 2017 which, while a positive sign in the right direction, is not impressive for this once booming titan of an industry. The good news is, with the acceptance of changing times and investment in different printing technologies, the same report predicts that in 2018 the commercial printing industry could grow by as much as 3%. 

Many experts believe that the industry must continue investing in new technologies to prepare for the future while also promoting the benefits of traditional printed materials to remain relevant.

2018 Will Be a Big Year For 3D Printing

IDC, an industry intelligence reporting firm, made a promising prediction that companies will invest nearly$12 billion in 2018 towards Discrete Manufacturing for the production of unique items like plane parts, toys, and other objects. Additionally, experts predict continued investment in emerging medical-based printing such as bioprinting and regenerative medicine. This is a great opportunity for the commercial printing industry to innovate and adapt to changing times as a shift away from traditional printed materials like business cards, newspapers, and direct mail flyers.

A Look Back at Financing in 2017

2017 was a big year for new print equipment financing. EDA, and industry reporting firm recently published their yearly insight report for 2017. In the report, they list the top equipment financers and buyers for 2017 with specific emphasis on November. The top financiers for the month including the five that tied for fifth place are the following organizations:

GENEVA CAPITAL                                     17
TCF EQT FIN INC                                      11
HEIDELBERG USA INC                              8
BOBST NORTH AMER INC                        5
CIT BANK                                                    4
KBA NORTH AMERICA                               4
PNC EQUIPMENT FINANCE                      4
MACDERMID PRINTING SOLUTIONS       4
WELLS FARGO EQUIPMENT FINANCE    4

All of these top companies combined for 65.6% of total new printing equipment financial statements. Even the top lender alone, Geneva Capital financed enough equipment to account for 18.3% of the total. The same report also lists the top U.S. printing equipment buyers as well:

Marketing Instincts California Epson          4
School of Visual Arts New York Epson       3
GameTime Wraps Arkansas HP                 3
RR Donnelley & Sons Delaware KBA         3
Quality Printing Massachusetts Ploar         2

From this list, you can see the company, their location along with the units that they financed.

Moving Forward into 2018

With more companies choosing to embrace the digital age and investing in more advanced technologies, shifting focus away from traditional printing methods, the commercial printing industry could be ready for its next phase. We'll just have to wait and see, but with experts predicting slightly more growth this year, 2018 might be a prominent year for the industry as a whole.

What is Section 179?

Section 179 is the Internal Revenue Service (IRS) tax code which allows individuals or businesses to fully deduct certain assets (usually equipment and software). This incentive was created by the IRS to encourage business to buy machinery and equipment for their business and take a full tax deduction in the year it’s placed in service. This has been very important for many construction or manufacturing companies and other industries which require large, expensive machinery in the course of the business. If any asset is not eligible for Section 179, it may still be available for bonus depreciation or regular depreciation. Certain limitations are also put in place in the type of assets and amount that can be expensed on the tax return.

Qualifying Property

Section 179 was created for business so most business equipment qualify for Section 179. All business that use equipment for their business such as machinery, computers, furniture, software, vehicles greater than 6,000lbs and other business assets are eligible for a 100% deduction under Section 179. If you have purchases or financed any assets for your business, you consider Section 179 deduction. In order to take the deduction, the asset must have been purchased and placed in service during the tax year.

Property not qualified for Section 179

Although most business assets will qualify for Section 179, some assets such as real property is not eligible for a Section 179 deduction. Real property is defined as land, buildings, permanent fixtures and other improvements to real property. Any property that is not eligible for Section 179 may still be available for capitalization and depreciation. Bonus depreciation is available for these assets as an accelerated depreciation method.

Vehicles under 6,000lbs also do not qualify for section 179 deduction. When section 179 was originally introduced, SUV’s were acceptable for a full Section 179 deduction, however this loop-hole created many business purchases of Hummers and other expensive luxurious SUV’s for a full tax deduction.

LimitationsThere are different limitations to Section 179. The maximum amount that can be deduction for most section 179 assets is 510,000. This limitation is also reduced by the amount of the assets the exceeded $2,030,000 (for 2017).

Form 4562

If your business qualifies for a Section 179 deduction, a Form 4652 must be completed and filed with your annual tax return. The Form 4562 is required for all depreciation and amortization deduction expenses on the tax return. In Part I of the Form 4562, you will list the cost of the asset and calculate the Section 179 deduction you are eligible for. The Form 4562 must be filed with your business or individual tax return.

Summary

Section 179 has helped many businesses for numerous years and it’s still available for tax year 2017. Many businesses rely on this code section to relieve the tax burden during tax years where large equipment is purchased, financed or leased and placed in service during the tax year. The Section 179 limitations vary by year so be sure to check the IRS.gov website for the deduction limits during the tax year you are filing for.