We review your transactions to ensure accurate accounting of all income and expenses. When you purchase an item—or a group of items totaling $2,500 or more (our capitalization threshold)—we will send you a task requesting details about the asset. We may also need supporting documentation to properly record it as an asset in your books.
According to the IRS, any property you buy and use in your business that has a useful life of more than one year and costs $2,500 or more must be capitalized. This means that you cannot deduct the full cost of the asset in the year you purchase it, but rather, you must spread the cost over several years through depreciation. There are some exceptions to this rule, such as for certain computer software and qualified real property, but in general, assets that meet these criteria must be capitalized.
In general, assets costing $2,500 or more are capitalized. This means that the cost of the asset is added to the balance sheet and is gradually written off over time through depreciation. Capitalizing assets helps to more accurately reflect the value of the organization's assets on the balance sheet and ensures that the costs associated with those assets are properly matched with the revenue they generate over time.
Depreciation is an accounting method through which the cost of a long-term asset is allocated over its useful life. Essentially, it is the process of expensing the cost of an asset over the period during which it is expected to generate revenue. By doing so, the depreciation expense reduces the value of the asset on the balance sheet, reflecting the fact that the asset is being used up over time. This helps ensure that the costs of the assets are properly matched with the revenue that they generate over time, and allows for more accurate reporting of the organization's financial position and performance.
If the asset gets capitalized, we will need the receipt of purchase to attach to the asset on the books. You will see it listed under assets on your balance sheet. We will depreciate the asset each year. You will see your depreciation hit two accounts: accumulated depreciation on the balance sheet and depreciation expense on the P&L
If you are purchasing an item or group of items used together that cost $2,500 or more, you can send over the receipt and details ahead of time. We need the following details:
Asset: [Enter a description of new asset] Transaction Amount: [Amount] Transaction Date: [Date]
DETAILS WE NEED: 1. Will this asset be used 100% for business?
2. Please explain this asset in detail. Please include the vendor purchased from, brand, model or model #, color, and any other specifics about the asset to identify it. (If audited, you will need to identify this exact asset.
3. Please explain your plan of use for this asset in your business
Is this the only payment towards this asset, or will there be more? If so, when and how much?
Do you have documentation, receipts, or paperwork to show proof of this purchase? Please upload those as we need to attach them to the asset in QBO.
You can always reach out in your client portal if you have any questions.
Updated 2/24/25