Accounting and Tax Treatment of Computer Hardware and other Fixed Assets
Investment in capital items such as computers, furniture, equipment and cars can cause confusion for small business owners. Since these are purchases that affect the cash flow of the business, it seems that they should be accounted for as expenses similar to office supplies or rent. There are however special rules for any acquisitions that qualify as “fixed assets”. A fixed asset, simply speaking, is an acquisition that provides a long term economic benefit to the business. In other words, any business purchases that has a useful life that extends beyond one year, will usually qualify as a fixed asset. Below I discuss the accounting and tax treatment of fixed assets.
18 Accounting Terms that every new business owner should know.
When starting a new business, you will be subjected to a variety of financial jargon. This can come from your bank, Revenue Canada or Revenue Quebec, suppliers, customers and various other business partners. If you are unfamiliar with this terminology, these requests which are often quite straightforward, can become stressful if you are not exactly sure what they mean. It is important, therefore, to arm yourself with at least a basic vocabulary of the most common financial and accounting terminology that will give you a better understanding of your business and therefore be well equipped to answer any questions that come your way.