Depreciation is the accounting term for an expense that reflects the loss in value of an asset over time. It’s a non-cash expense -- meaning depreciation doesn’t come out of your bank account or pocket, but is still deducted from your business income before calculating taxes. There are a couple key things to know about depreciation:
- You can only depreciate an asset, such as a car, building, or machine used for business.
- An asset’s ‘useful life’ is how many years you can depreciate an asset for. The IRS has predetermined useful lives for different asset classes. A business vehicle, for example, should be depreciated over 5 years.
In Hurdlr Pro, you can add depreciation expenses for your business assets. This gives you a better idea of your business P&L, and also reduces your tax estimate. You can even set your depreciation expenses to automatically recur every year.
Disclaimer: The information contained here is provided for informational purposes only and should not be construed as financial or tax advice. It is not intended to be a substitute for obtaining accounting or other financial advice from an appropriate financial adviser or for the purpose of avoiding U.S. Federal, state or local tax payments and penalties.