In the first bite sized lesson, we discussed the home office deduction. In our second bite sized lesson, we're going to be discussing business asset deductions. Let's first start by defining what a business asset is. business assets are usually big ticket, long lasting items that you purchase to produce business income, if the cost of your business assets is less than 20 $500, you have the choice of either deducting the entire amount as a business expense in the year that you purchase the item. On the other hand, if the asset costs you over 20 $500, you are required to record the purchase as an asset and depreciate it over the assets life and therefore you cannot expense the entire amount within the same year. That you purchased the item.

And usually at tax time, your accountant, your CPA, or your tax pro will help you set up the depreciation schedule. Or you may be able to even deduct it as a section 179 deduction, but the depreciation and the 179 deduction is not something that you need to worry about. That's something that your accountant would handle, or you're going to have to do for the purpose of QuickBooks self employed is to properly record the asset. Once the asset is properly recorded, then at the end of the you just provide your account accountant with the report and they'll know how to move forward from there. So for the purpose of this lesson, we're going to record two assets. One is going to be over 20 $500 and one is going to be under 20 $500.

So what are some examples of business assets computers It's an example of a business asset, furniture, software, business, machinery and so on and so forth. So really, it's any large item that costs you over a certain amount of money that you use in your business to produce business income. That's what's considered a business asset. The first assets were going to record heavy cost of less than 20 $500. And the second asset will cost over 2500. Once I'm done recording both assets, I'll show you how both assets are presented in the system.

One of the assets is going to appear on the profit and loss statement, and the other assets will appear only on the business assets right here. So let's get started. So, so to record an asset, we're going to click on transactions. This is where we To add new transactions, we're going to go to the top of the right hand corner of the screen where it says add transaction, we're going to add a transaction we're going to change the date of purchase to July of 2017. Now the description of the assets let's say we're purchasing a camcorder and the cost of this camcorder we're going to say was 1800 dollars. Now we're going to add it to a business category.

So that's a camcorder. Let's click on the show all categories, and let's see if we can find anything that has to do with video or some type of equipment. Okay, so there you go other tools and equipment so we can include that as a Equipment since a camcorder is somewhat of a small equipment now if we weren't if we wanted to now Okay, so we have two options. As it relates to equipment, we have other tools and equipment. And then we have other tools and equipment greater than $200. Whenever you see something that says greater than any amounts and in parentheses there, if you click on this, it's going to wind up amongst your business assets, you will not see it on your profit and loss statement.

So because we want to see this transaction on our profit and loss statement, and we want to take the deduction This year, we're going to click on other tools and equipment and make sure that we do not click click on other tools and equipments greater than $200 even though the cost of this particular equipment is more than $200. So let's go and click on the tools and equipment. And then we can add any type of note like in this area, and we can also attach a receipt. Once we're done adding notes and attaching receipts be completed. We press Save There you go. The second business asset we'll be adding is going to be a computer.

So we'll just type in computer, the cost is going to be 30 $500 for the cost of 30 $500. Remember, this has to be recorded as an asset and not as an expense. So in selecting the category, we have to make sure that the category represents the asset section. So we're going to type in computer and let's see. Okay, so here it is. It says computers and assets, usually over $200.

So in this case, we're purchasing something that of course is over $200. If a computer and we do want it to go go to the asset categories, we're going to click on this option. So once we once we have chosen the category, we can go ahead and put a note in here that say it's a purchase from Office Depot. Let's say it was a Mac computer. Even though I don't use Mac, I'm a PC girl. But we'll go with a Mac for today.

And then of course, you can attach the receipt here when she wants you to attach the receipt if you choose to, then you can click on Save. So now that we've now that we have recorded both an asset and also a small equipment that's going to be expensed. We're going to go look and see where each of those transactions landed. One of them as I said, is going to be on the balance sheet. I'm sorry, one of them is going to be on the profit and loss statement, and the other one is going to be under the business assets section. So let's look for them.

The first question we want to find is the camcorder that we purchased for 1800 dollars. So in order to find that we're going to look at the profit and loss statements. And let me preface this by saying that the profit and loss statement is a report that you can generate inside QuickBooks self employed. Now, we're not going to talk about reports extensively in this lesson. But in the next lesson, I'm going to go over over reports for right now I just want to show you where this particular transaction winded up, but we're not, we're not going to get into details about the profit and loss statement, or any other reports in this lesson. So in order to find that transaction, we're going to click on reports.

And here's profit and loss. What do we want this? Yes, the profit and loss are going to go with the date. So I think we recorded it for July of this year. So we're going to click on year to date, and then click on view. So what we're looking for is the 1800 dollar camcorder that we recorded.

So we recorded it under other business tools, I believe, so it's going to show up on the other business expenses. So we're going to click on 20 $600, which is other business expenses and is going to take us to a breakdown of all those what that total amounts consists of. And we're looking for the 1800 dollars and here it is, this is the 1800 dollar camcorder that we just recorded. So as you can see, it is on the profit and loss statement. Therefore, we will get the deduction this year. So to find the other transaction, which we recorded as an as a business asset that would eventually be depreciated, we're going to click on taxes, and then click on annual taxes.

Remember, now went back to that screen that says Schedule C deductions. And we're going to scroll down to business assets. And here it is. Here's the computer that we purchased for 30 $500. So we have two assets. Right now we have an asset of software apps and software or some type of web web.

Service, which is only $315. And Jennifer decided that even though it only cost her $315 she's choosing to depreciate it. If she wanted to expense this, rather than depreciate it, then she could have chosen a category that would have put this on the profit and loss statement. But for some reason she wants to depreciate it, which she can, that's her choice. So here's the computer that we recorded for 30 $500. Now, we purchased this item on September 18 of 2017.

So it's heading off, it was placed in service also on September 18 2017, so we purchased it on the same date, and we placed it in service on the same date. Now, if for some reason, we decided to place this item in into surface on a day After we purchased it, we can go in here and make the adjustment. So it was purchased on September 18. But we decided that Okay, we're not going to put it into service until October 18. So all we have to do is go in here, click the button or rather click the pen icon. And we can change the date that we put the item in service.

So we're going to change this to October October 10 data for now we'll change that you put it in service. And the reason why the date that the item was put in service is important because your accountant or your CPA or your tax preparer needs to know the date that this item was put in service. So when they're doing the depreciation, they are using the right information because the amount of depreciation that you receive is directly tied to when you purchase the item in addition to The item costs. Also while we're in here, if you want to change the name of the asset, you can do that here as well. And also, if you want to change the type of assets, you can also do that. Sorry, you can also do that here.

So you can change the type of asset right at this drop down area. So the three things you can change. On this screen are the description of the asset and escape the computer, you can change the category of asset and you can also change the dates that the asset was placed in service. In this lesson, we learned how to record business assets and how to record such assets depending on whether we intend to depreciate the asset or to expense the entire cost of the asset in the same year that we purchased it. In our third and final bite size lesson, we're going to go over Health care and health savings account deduction.