Tag: Understanding Depreciation
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Internal Revenue Service (IRS) Definition of an Expense
The Internal Revenue Service defines a business expense as ‘ordinary’ and ‘necessary’. Ordinary expenses are those costs typically incurred in your industry. A restaurant would not ordinarily purchase vaccines. And a medical practice would not purchase 50 heads of lettuce.
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How to Purchase Equipment for a Restaurant – Business Finesse
Purchasing equipment for a restaurant is a daunting task. There are three phases to successfully purchase restaurant equipment.
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The Various Forms of Depreciation
There are various forms of depreciation used in the small business world. In general, depreciation is not required but it is advisable.
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What is Amortization?
Non-physical assets are expensed to the income statement or profit and loss statement via a method called amortization. It is most commonly used in the mortgage industry to refer to the monthly payment made to pay interest and the principal (the amortizable portion) on a debt instrument.
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How is a Sole Proprietorship Taxed? Understanding Schedule C
The sole proprietorship is taxed at the individual tax level. Basically, the income earned during the calendar year is calculated on Schedule C of Form 1040. The final number is transferred to the front page of Form 1040 to line 12. Schedule C is divided into three major sections.
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Small Business Tax Depreciation – Section 179
The Internal Revenue Service sets the depreciation allowance based on the Code as promulgated by Congress. The most commonly referenced section is 179. This is a form of accelerated depreciation allowing the small business owner the opportunity to take a large expense deduction and reduce their tax obligation immediately.
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Depreciation – This is Weird Accounting
In the world of accounting, there are two types of expenses on the reports widely misunderstood. They are depreciation and amortization. I will try to help the novice gain an understanding of depreciation in this article.
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Local Revenue Tax – The Business License
A business license is the tool used by local governments to monitor all businesses in their community. It triggers at least two types of tax. At a minimum a revenue and personal property tax is charged through this registration process.