Monthly Archives: May 2012

Article: How Business Structure Impacts Allowable Deductions

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Business owners consistently wonder which legal structure is correct for their business, financial situation and taxes. It may be that they are looking to avoid the “double taxation” conundrum or reduce self-employment and payroll taxes. The issue of double taxation is a key factor when deciding on a business structure, however, there are other tax implications involved when analyzing the choices.

The good folks at Small Business Trends have put together a great article that encompasses health care deductions, retirement plans, fringe benefits, employee education and corporation losses. They provide excellent information that will allow you to better decide whether to operate as a C Corporation, an S Corporation or an LLC.

Read Full Article Here

Questions or comments about this post? We invite you to respond in the space below.

More information about Bassets eDepreciation software can be found at Bassets.net. While there you can set up a demonstration, download a free evaluation copy and get a personalized pricing estimate.

Customize The Fields on a Fixed Asset Data Entry Form

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With its 22 user definable fields, Bassets eDepreciation allows the user to create a data entry form to meet their specific needs. Each field on the left-hand side of the Asset Maintenance form, with the exception of the description field, is completely user definable. The Master List Table feature is one of the major User Definable properties and provides the user with a convenient drop down list of valid selections for a specific data field. This same list will also validate information that is typed in directly by the user. To find out exactly how to utilize this powerful feature, watch the short video below.

More information about Bassets eDepreciation software can be found at Bassets.net. While there you can set up a demonstration, download a free evaluation copy and get a personalized pricing estimate.

 

Property Tax Reporting – An Overview

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Many times we receive questions from our clients and readers of this blog. In general we will respond to those questions either directly to the customer or via the reply section right here. However, every once in a while, a question is asked that has universal appeal to anyone involved with fixed assets depreciation. When those questions arise we will go a little deeper and post them as a topic on this blog. This post on property tax reporting is the first in what will become a regular feature.

We have had numerous requests about property tax regulations recently.  Property tax regulations require that corporations comply with accurate reporting of their fixed asset valuations. Compiling this information can be an extremely difficult task in a spreadsheet. However, it is significantly easier to manage with fixed asset software that allows easy setup and maintenance of key asset properties. We here at Depreciation Guru highly suggest that you investigate this option before moving forward.

Once you decide to move forward, the absolute minimum information required to file a property tax form is as follows:

  • Year of acquisition
  • Cost of the asset
  • Class or type of asset
  • Taxing authority which may be one or more of the following: State, County, City

Please note that assets are typically separated in to classes. Here are some common examples:

  • Machinery & Equipment
  • Furniture & Fixtures
  • Computer Equipment
  • Other Equipment
  • Building/Structure
  • Building/Fixture
  • Land
  • Land Improvements

The class and year of acquisition is then used to group and total the cost. Finally, a tax rate for each class would be utilized to calculate the actual property tax due. The above is only a sample set of classes, and it is very likely that a large corporation could have many more classes available to properly segregate all of their assets.

Questions or comments about this post? We invite you to respond in the space below.

More information about Bassets eDepreciation software can be found at Bassets.net. While there you can set up a demonstration, download a free evaluation copy and get a personalized pricing estimate.

Case Study – Micro Electronics

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Micro Electronics is the parent of several technologically gifted children: its divisions. The company’s nearly 20 Micro Center computer retail stores, which average 45,000 sq. ft., feature about 36,000 products organized in more than a dozen specialized departments. Micro Center is the largest of Micro Electronics’ divisions and operates in 13 states. Micro Electronics sells its own brands of notebook and desktop computers under the WinBook and PowerSpec names. Micro Center Online is the company’s online and phone order operation.

When Micro Electronics decided to switch to the Bassets Fixed Asset System from a competitive product, they got more than they bargained for. They selected Bassets based on the accuracy of their depreciation calculations with a 445 calendar. In addition, they wanted a CIP (Construction in Progress) module to track their invoice activity. Surprisingly, the biggest benefit may have come from what proved to be a difficult data conversion. Mismatching of property type and depreciation method/first year convention/recovery periods in the old system tested the Bassets technical staff, but now Micro Electronics is getting the correct monthly depreciation calculations.

To read more about how Bassets helped other companies with their depreciation needs, go to the Bassets Fixed Assets case studies page.

More information about Bassets eDepreciation software can be found at Bassets.net. While there you can set up a demonstration, download a free evaluation copy and get a personalized pricing estimate.

A Guide To Basic Depreciation Calculation

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The tax laws and accounting standards that apply to the depreciation of business assets can be complex, confusing and difficult to decipher. This guide to basic Depreciation Calculations has been developed to make the complex task of depreciating your business assets as easy as possible. This will also assist you in understanding the basic concepts of depreciation, as well as, the methodology used by The Bassets Fixed Asset System to enter depreciation information and perform required calculations.

The information required for the depreciation calculations are as follows:

  • Property Types:  In general, depreciation is allowed on tangible and intangible property with a limited useful life of more than one year that is used in a trade or business or held for the production of income.
  • Service Date:  IRS rules define when an asset is placed in service and depreciation of the asset may begin. An asset is considered to be placed in service when it is first placed in a condition or state of readiness and availability for a specifically assigned function.
  • Useful Life:  Depreciation is allowed on tangible and intangible property with a useful life (Recovery Period or Amortization Period) of more than one year.
  • Cost Basis:  The basis is equal to asset’s purchase price. You may need to make some adjustments, under a number of different circumstances.
  • Depreciation Methods:  The Tax rules allow various methods to depreciate assets, including MACRS — Modified Accelerated Cost Recovery System and SL — Straight Line.
  • First Year Conventions:  When a piece of property is placed in service, you are required to use a particular convention to determine the depreciation deduction you will get for the first year.

This modified version of a White Paper is intended to give you a better understanding of the basic depreciation concepts. You can find more detailed version, including a comprehensive example, on the Bassets White Papers page.

 

More information about Bassets eDepreciation software can be found at Bassets.net. While there you can set up a demonstration, download a free evaluation copy and get a personalized pricing estimate.