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. To do so, select the Depreciation category when tagging or creating an expense. 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.