Glad it was helpful! Yes, the IRS has capitalization rules for fixed assets that allow for small assets to be expensed. $2500 is the threshold for unaudited businesses. Thanks for watching!
Thank you for being a valuable asset in the world of Accounting. Your willingness to help others and explain these videos so clearly is greatly appreciated. 🙏👏 This was exactly what I needed.
This was such a good video! Do you have one showing how to record payments on the loan? Does the vehicle purchase price include finance charge or should that be separate?
This video helped me so much, thank you. Now how do I Record a Loan only with no assets. I took out a business Loan to purchase my Business how do I record it.
Whats the difference between making a "Ford F-150" Subledger/Liability account title than naming the account "construction vehicles"; Then the Ford 150 would be one entry in the Construction vehicles assets/liabilities account? Im guessing this method makes it easier for a business owners without an accounting degree.
Thank you for the knowledge sharing. My question is what if the down payment for the truck was paid with cash. What type of account do is needed to create for the debit side? Thank you very much!
Hello, At the 7:48 mark, you discussed accumulated depreciation and depreciation expenses. If you take the full $55,000 for the year, which reduces the vehicle's value to zero (utilizing Section 179 or Bonus Depreciation), does this imply that in the following years, you won't be able to depreciate the value of the vehicle any further?
Appreciate for the vid. I purchased a restaurant with cash $60,000. No loan involved. How do I make a journal entry for this siatuation? Thank you very much!
Great question; you will first need to do a purchase price allocation. Take the 60k purchase price and allocate the cost to equipment, vehicles, goodwill, etc. Then you will debit the asset classes for the 60k and credit equity. The equity account will depend on your type of business structure.
OK question!!! my client didn't just buy a new car, he did years ago but I'm just now his bookkeeper how do I started recording it coming in, if I do your steps in the journal entry and say he put 5000 cash down and credit the cash account won't he be out of balance
If the downpayment was paid personally and not through the business checking account, you will want to record this as a capital contribution or due to/from owner. Hope this helps and thanks for watching!
Great idea, I'll put one together. The adjustment will run through the bank feed. Each payment will need to be allocated between principal and interest. Thanks for watching!
My business has a loan for 84,400 for heavy equipment, how would I go about adding this into quickbooks? Would I add it as a positive or a negative. If possible we would like to depreciate everything to the max this tax year due to it being our first year in business.
Hey Jorden, congrats on starting a business! Every entry you make will impact two accounts. Bonus depreciation will be limited to 80% this year, but you will still receive a large deduction. Here is how you book the initial purchase: Debit - Fixed Asset - Equipment $84,400 Credit - Long-Term Liability - Equipment Loan. $84,400 Here is the entry to book the depreciation: Debit - Depreciation Expense (amount will be determined by your CPA) Credit - Accumulated Depreciation
Hey Itz! It's hard to say without looking in your books and seeing what's been done, but I would start with your chart of accounts and make sure you have the proper asset classes set up. Once they are set up, make sure your new assets are classified to the fixed asset class on your balance sheet. You may want to hire a CPA to review your books and make any necessary adjustments to get you on the right path. Thanks for watching!
I'm helping my small biz employer get their balance sheet correct and entering loans they've already been paying on for several months. I have all statements. They financed a truck in May 2022, but the down payment was from their personal account. They reimbursed themselves from the business, but not 'til several months later. How do I properly record this since the date of the down payment reimbursement and the date of securing the loan are not the same?
Hey Danae, I would set up a "Due to/from Owner" to record the initial down payment. Once the owner contributes the downpayment, it will eliminate the liability. Thanks for watching, and please make sure to subscribe!
I just added a new vehicle and I entered the starting date and starting balance which gave me an Opening Balance Equity balance - how do I get rid of this balance? And why does QBO have this as an option? Seems to just mess people up.
Hey Stacey, I always recommend adding new fixed assets through a journal entry to avoid the "Opening Balance Equity" plug, that QBO is known for. I'd go back and delete the fixed asset and make a journal entry. Since QBO is a double entry accounting system, they need to plug the other side of the entry somewhere, so their default is OBE. A journal entry requires you to make equal Dr. and Cr., so there is no plug. Hope this helps!
Great Clip. What about the next steps on recording the monthly payments with the principal and interest like you stated? Do you have a video for that part?
Hey Zoltan, when you code the payments, break out the payment between interest and principal. Another video is in the works. Make sure you subscribe so you don't miss out! Thanks for watching, Cheers!
I bought a truck in 2023. I paid all cash of $56K. I’m now showing Net Loss in 2023 in my Profit & Loss because I expensed the full amount. Can I defer my accumulation deprecation/depreciation expense starting in 2024 using the 5 yr straight line depreciation? In essence, the depreciation expense will start in 2024 instead of 2023. This way my 2023 Profit and Loss statement does not look so bad. Along the same line, assuming 2024 is super profitable, can roll my 2023 + 2024 accumulation depreciation/expenses together in 2024 calendar year using the 5 year straight line depreciation? Thank you!
@@AskaCPA Thank you for your reply. On a 5 yr straight line depreciation, my annual depr expense is $11.2K (56K / 5 yrs) . If I used the truck 80% of the time for business, do I record in QB as $8.9K depreciation expense, or should it still be $11.2K?
Can you show me how to record a vehicle loan, for example, a 50,000 car value, a 5,000 down payment, and an 800 monthly payment for 60 months? how can we record it, Please explain if possible In QB live video to record it
Hey Ram, yes, you can code the purchase to the fixed asset account. Just make sure the correct account is set up in your chart of accounts. Thanks for watching!
Thank you for this video. Just bought an F-150, paid in full; no loan. Question please: If I created the fixed asset and the journal entry as you describe, do I also still need to record the transaction as an expense under "Expenses?" I wrote a business checking check in the full amount, so it seems I need to enter that check under expenses, is that correct? Thank you.
Hey Jeff, great question. You would record this in two entries. The first is to record the purchase of the asset. Dr. Fixed Asset Cr. Cash Next, you would record the expense through depreciation. If you're taking 100% bonus depreciation, here is the entry: Dr. Depreciation Expense (this is the expense) Cr. Accumulated Depreciation (contra account that offsets the fixed asset) Hope this makes more sense. Thanks for watching!
@@AskaCPA Thank you for the response, but still a little above my QBO skill level :). Are you directions above done as two separate journal entries, or perhaps as separate lines (entries) all on the same journal entry ? And I still don't understand if I need to do an "Expenses" transaction entry also, to account for the check that I wrote. And yes, I do plan to take the 100% bonus depreciation. Thank you again!
I am doing the same steps but not reflecting the same in balance sheet. My scenario: Car total $35,653.50, Down payment $1,500, Financed $34,153.50. But In my balance sheet at the assets is showing me $37,153.50 instead of the original price of $35,653.50. Like showed in you video it remains the same value in the balance sheet... Help! hahah Thank you!
Since the $1500 went through your cash account and was properly booked to the asset, you need to lower the purchase price by the $1500 in your journal entry. This will lower the asset to the correct value. Hope this helps! Thanks for watching!
Great video. Just what I was looking for. Example, Next month I will buy a car for $30,000 under my business LLC. I will make $10,000 down payment from my business checking. The $20,000 loan will not be from the dealership or from the bank. I will fund the $20,000 loan from my personal account at 10% interest. My business will have interest expense on this car loan as a business expense. I will document all the entries in QB as shown in your video Q: When I file for my 1040, do I have to pay for the 10% interest income that I earned from my business because I lend the money to fund the car ? If so, does my business need to send a 1099 to me as some type of earned income? I’m trying to think outside the box where my business will get the interest expense while I earn interest income as a personal income. TIA!
Typically, the loan would be between the bank and your business. There is no benefit of loaning the money from the bank to yourself and then to the business. If this is a single member LLC, meaning you own 100% of the business, then the business activity will file on your personal tax return (Form 1040, Schedule C). The interest expense paid on the loan would be expensed on your business return since the auto is owned by the business. Also, consider bonus depreciation on the auto. 2022 is the last year of 100% bonus depreciation on qualifying autos (over 6000 GVWR). Bonus will start an annual 20% step down starting in 2023 to 80%, then 60% for 2024, etc.
@@AskaCPA Thank you for the response. I’m an LLC filing as an SCorp. If you read what I wrote earlier, I was hoping to generate interest income by lending my personal fund to my business for the remaining balance of the car loan. Having said that, does my business need to generate a 1099 at year end for the interest income I generate from the business? How will the IRS know if I don’t report the 1099? As for the bonus depreciation, I don’t have a lot of net profit to take advantage of Section 179 for a full depreciation.
There are related party rules and minimum interest requirements, but yes, you would file a 1099-INT from your business. It's a circular transaction, since you would be taking the interest expense deduction on the business which is reported on a K-1 and included in your personal tax return. The interest income would just offset the additional business expense, so there is no benefit to this structure. Bonus depreciation is different from Sec. 179, and does not require taxable income to take the deduction.
I thought I would never understand how to record a fixed asset and a loan. Until I saw this video. It became all clear to me. Thank you.
Glad it helped!
Thanks! This is exactly what I was looking for after being totally stumped for hours!
Thank you!!! Very clear and easy to understand. You also cover the depreciation which is normally linked to the purchase of an asset above 2,500.00.
Glad it was helpful! Yes, the IRS has capitalization rules for fixed assets that allow for small assets to be expensed. $2500 is the threshold for unaudited businesses. Thanks for watching!
Thank you for being a valuable asset in the world of Accounting. Your willingness to help others and explain these videos so clearly is greatly appreciated. 🙏👏 This was exactly what I needed.
My pleasure!
This was such a good video! Do you have one showing how to record payments on the loan? Does the vehicle purchase price include finance charge or should that be separate?
This video helped me so much, thank you. Now how do I Record a Loan only with no assets. I took out a business Loan to purchase my Business how do I record it.
Whats the difference between making a "Ford F-150" Subledger/Liability account title than naming the account "construction vehicles"; Then the Ford 150 would be one entry in the Construction vehicles assets/liabilities account?
Im guessing this method makes it easier for a business owners without an accounting degree.
Thank you for the knowledge sharing. My question is what if the down payment for the truck was paid with cash. What type of account do is needed to create for the debit side? Thank you very much!
Good question! You will debit the asset and credit cash. If the cash was contributed by an owner, then you would credit equity - owners contributions.
@@AskaCPA thank you very much !
Amazing video! Straight to the point and clear. Thank you.
Hello, At the 7:48 mark, you discussed accumulated depreciation and depreciation expenses. If you take the full $55,000 for the year, which reduces the vehicle's value to zero (utilizing Section 179 or Bonus Depreciation), does this imply that in the following years, you won't be able to depreciate the value of the vehicle any further?
Yes, that's correct. If you take bonus or 179, and the asset is fully depreciated, you are no longer able to depreciate the asset.
Very helpful! Simple and to the point. Thank you
Glad it was helpful!
Appreciate for the vid. I purchased a restaurant with cash $60,000. No loan involved. How do I make a journal entry for this siatuation? Thank you very much!
Great question; you will first need to do a purchase price allocation. Take the 60k purchase price and allocate the cost to equipment, vehicles, goodwill, etc. Then you will debit the asset classes for the 60k and credit equity. The equity account will depend on your type of business structure.
OK question!!! my client didn't just buy a new car, he did years ago but I'm just now his bookkeeper how do I started recording it coming in, if I do your steps in the journal entry and say he put 5000 cash down and credit the cash account won't he be out of balance
If the downpayment was paid personally and not through the business checking account, you will want to record this as a capital contribution or due to/from owner. Hope this helps and thanks for watching!
Very helpful. Thank you so much.
do you have a video for the next steps on recording the monthly payments with the principal and interest
Great idea, I'll put one together. The adjustment will run through the bank feed. Each payment will need to be allocated between principal and interest. Thanks for watching!
After creating this journal entry, how to you account for monthly repayment with interest paid?
The interest will be expensed, and the principal portion will go against the liability.
Why you did not chose "Notes Payable" instead? Just wondering what the difference is?
My business has a loan for 84,400 for heavy equipment, how would I go about adding this into quickbooks? Would I add it as a positive or a negative. If possible we would like to depreciate everything to the max this tax year due to it being our first year in business.
Hey Jorden, congrats on starting a business! Every entry you make will impact two accounts. Bonus depreciation will be limited to 80% this year, but you will still receive a large deduction. Here is how you book the initial purchase:
Debit - Fixed Asset - Equipment $84,400
Credit - Long-Term Liability - Equipment Loan. $84,400
Here is the entry to book the depreciation:
Debit - Depreciation Expense (amount will be determined by your CPA)
Credit - Accumulated Depreciation
I need help on all my fixed assets. They are wrong on my balance sheet. How can I make the proper adjustments?
Hey Itz! It's hard to say without looking in your books and seeing what's been done, but I would start with your chart of accounts and make sure you have the proper asset classes set up. Once they are set up, make sure your new assets are classified to the fixed asset class on your balance sheet. You may want to hire a CPA to review your books and make any necessary adjustments to get you on the right path. Thanks for watching!
How to I record a company vehicle to my fixed assets. The vehicle was purchased many years ago , no current on the vehicle
The asset will need to be sold to the business at fair market value. You can then use the FMV to begin depreciation.
I'm helping my small biz employer get their balance sheet correct and entering loans they've already been paying on for several months. I have all statements. They financed a truck in May 2022, but the down payment was from their personal account. They reimbursed themselves from the business, but not 'til several months later. How do I properly record this since the date of the down payment reimbursement and the date of securing the loan are not the same?
Hey Danae, I would set up a "Due to/from Owner" to record the initial down payment. Once the owner contributes the downpayment, it will eliminate the liability. Thanks for watching, and please make sure to subscribe!
I just added a new vehicle and I entered the starting date and starting balance which gave me an Opening Balance Equity balance - how do I get rid of this balance? And why does QBO have this as an option? Seems to just mess people up.
Hey Stacey, I always recommend adding new fixed assets through a journal entry to avoid the "Opening Balance Equity" plug, that QBO is known for. I'd go back and delete the fixed asset and make a journal entry. Since QBO is a double entry accounting system, they need to plug the other side of the entry somewhere, so their default is OBE. A journal entry requires you to make equal Dr. and Cr., so there is no plug. Hope this helps!
@@AskaCPA Perfect, thanks!
How would I set up depreciation for a computer?
Great Clip. What about the next steps on recording the monthly payments with the principal and interest like you stated? Do you have a video for that part?
Hey Zoltan, when you code the payments, break out the payment between interest and principal. Another video is in the works. Make sure you subscribe so you don't miss out! Thanks for watching, Cheers!
@@AskaCPAdid you make a video explaining this ❤
Very Informative content. Keep going on. Thanks.
Thanks, will do!
I bought a truck in 2023. I paid all cash of $56K. I’m now showing Net Loss in 2023 in my Profit & Loss because I expensed the full amount.
Can I defer my accumulation deprecation/depreciation expense starting in 2024 using the 5 yr straight line depreciation? In essence, the depreciation expense will start in 2024 instead of 2023. This way my 2023 Profit and Loss statement does not look so bad.
Along the same line, assuming 2024 is super profitable, can roll my 2023 + 2024 accumulation depreciation/expenses together in 2024 calendar year using the 5 year straight line depreciation? Thank you!
You can opt out of bonus depreciation and take the deduction over the life of the asset, but you can't postpone taking the deduction.
@@AskaCPA
Thank you for your reply.
On a 5 yr straight line depreciation, my annual depr expense is $11.2K (56K / 5 yrs) . If I used the truck 80% of the time for business, do I record in QB as $8.9K depreciation expense, or should it still be $11.2K?
Can you show me how to record a vehicle loan, for example, a 50,000 car value, a 5,000 down payment, and an 800 monthly payment for 60 months? how can we record it, Please explain if possible In QB live video to record it
Can we add fixed assets while creating bill or we need to create journal entry only
Hey Ram, yes, you can code the purchase to the fixed asset account. Just make sure the correct account is set up in your chart of accounts. Thanks for watching!
@@AskaCPA Thank you!
Hello, can you do a video on Accountable Plan for SCorp filers? 🙏
Great idea!
Thank you for this video. Just bought an F-150, paid in full; no loan. Question please: If I created the fixed asset and the journal entry as you describe, do I also still need to record the transaction as an expense under "Expenses?" I wrote a business checking check in the full amount, so it seems I need to enter that check under expenses, is that correct? Thank you.
Hey Jeff, great question. You would record this in two entries. The first is to record the purchase of the asset.
Dr. Fixed Asset
Cr. Cash
Next, you would record the expense through depreciation. If you're taking 100% bonus depreciation, here is the entry:
Dr. Depreciation Expense (this is the expense)
Cr. Accumulated Depreciation (contra account that offsets the fixed asset)
Hope this makes more sense. Thanks for watching!
@@AskaCPA Thank you for the response, but still a little above my QBO skill level :). Are you directions above done as two separate journal entries, or perhaps as separate lines (entries) all on the same journal entry ? And I still don't understand if I need to do an "Expenses" transaction entry also, to account for the check that I wrote. And yes, I do plan to take the 100% bonus depreciation. Thank you again!
@@jefffitzmayer5484 they are two separate journal entries
The depreciation journal entry is the expense transaction
@@jefffitzmayer5484 the CR Cash in your situation would be the check you wrote out
I am doing the same steps but not reflecting the same in balance sheet. My scenario: Car total $35,653.50, Down payment $1,500, Financed $34,153.50. But In my balance sheet at the assets is showing me $37,153.50 instead of the original price of $35,653.50. Like showed in you video it remains the same value in the balance sheet... Help! hahah Thank you!
Since the $1500 went through your cash account and was properly booked to the asset, you need to lower the purchase price by the $1500 in your journal entry. This will lower the asset to the correct value. Hope this helps! Thanks for watching!
Great video. Just what I was looking for.
Example, Next month I will buy a car for $30,000 under my business LLC. I will make $10,000 down payment from my business checking. The $20,000 loan will not be from the dealership or from the bank. I will fund the $20,000 loan from my personal account at 10% interest. My business will have interest expense on this car loan as a business expense. I will document all the entries in QB as shown in your video
Q: When I file for my 1040, do I have to pay for the 10% interest income that I earned from my business because I lend the money to fund the car ? If so, does my business need to send a 1099 to me as some type of earned income? I’m trying to think outside the box where my business will get the interest expense while I earn interest income as a personal income. TIA!
Typically, the loan would be between the bank and your business. There is no benefit of loaning the money from the bank to yourself and then to the business. If this is a single member LLC, meaning you own 100% of the business, then the business activity will file on your personal tax return (Form 1040, Schedule C). The interest expense paid on the loan would be expensed on your business return since the auto is owned by the business. Also, consider bonus depreciation on the auto. 2022 is the last year of 100% bonus depreciation on qualifying autos (over 6000 GVWR). Bonus will start an annual 20% step down starting in 2023 to 80%, then 60% for 2024, etc.
@@AskaCPA
Thank you for the response. I’m an LLC filing as an SCorp. If you read what I wrote earlier, I was hoping to generate interest income by lending my personal fund to my business for the remaining balance of the car loan.
Having said that, does my business need to generate a 1099 at year end for the interest income I generate from the business? How will the IRS know if I don’t report the 1099?
As for the bonus depreciation, I don’t have a lot of net profit to take advantage of Section 179 for a full depreciation.
There are related party rules and minimum interest requirements, but yes, you would file a 1099-INT from your business. It's a circular transaction, since you would be taking the interest expense deduction on the business which is reported on a K-1 and included in your personal tax return. The interest income would just offset the additional business expense, so there is no benefit to this structure.
Bonus depreciation is different from Sec. 179, and does not require taxable income to take the deduction.
My screen looks different from urs are you using desktop
Nope, this is QuickBooks Online (QBO)
Why not to record the Invoice the Seller generate ?
my client just bought an aircraft & an aircraft tug for a non profit organization. how do I add this to my books in QuickBooks Online?”