Equipment

What counts as equipment#

Equipment is something you buy for the business and use for more than a year: a computer, a camera, a desk, a vehicle, tools. Its cost comes off your taxable income differently from everyday expenses, so it's kept on Equipment instead of under Expenses. (Accountants call these fixed assets.) Printer ink, a client lunch or a monthly subscription is an expense: see Expenses and Subscriptions.

Equipment is under Property in the sidebar, and is always there. Learn about depreciation, at the top of the page, on every item and in the Add Equipment dialog, is a four-step guide: what counts, what recording a purchase can save (worked out for how your business files, set in Tax structure), Section 179, bonus depreciation and MACRS, and what Form 4562 asks for.

Adding equipment#

Equipment

Equipment

The big things you buy for work: what you paid, what it's worth now, and what comes off your taxes. Learn about depreciation

Add Equipment

What You Paid

$4,320.00

3 items in use

Worth on the Books

$1,467.38

Cost less what's been written off

Write-offs in 2026

$668.57

Off this year's taxable profit

In use

ItemBoughtPaidWrite-offWorth now

Studio monitorsAudio gearFeb 10, 2025$640.00Written off in 2025$0.00

Standing deskFurnitureAug 2, 2024$1,180.00Over 7 years4 yrs 9 mo left$800.71

Sony A7 IV and lensCamera & video · 4417-2290Mar 14, 2023$2,500.00Over 5 years1 yr 4 mo left$666.67

Step 1 of 8PauseStart over

1. 1Click Add Equipment on the Equipment page.
2. 2Say what it is and pick its category. The category suggests a useful life: five years for a computer.
3. 3Enter what you paid and the day you bought it, then the card or account it came out of under Paid With.
4. 4Under How it comes off your taxes, keep Spread over years and check the Useful life. It shows about what comes off each year.
5. 5Open Serial number, warranty and more for the details an insurer or accountant may ask for.
6. 6Attach the receipt, then click Add Equipment.
7. 7Its page opens: what you paid, its worth on the books, what's been written off so far and the time left, with its value over time.
8. 8Further down, the Write-off Schedule: what comes off each calendar year. The first year is short, October to December.

Add Equipment is on Equipment, and in the Command Menu: press Esc and choose Add Equipment. The dialog's fields:

• What is it?: its name, like MacBook Pro 16".
• Category: Computer & phone, Camera & video, Audio gear, Vehicle, Furniture, Tools & machinery, Software or Other. The category picks the item's icon and suggests a useful life: 3 years for software, 7 for furniture and for tools and machinery, 5 for the rest. Once you've typed a useful life yourself, changing the category leaves it alone.
• What you paid: its cost, more than zero.
• Bought on: today, to start.
• Paid With: the card or account it came out of, or Not recorded. With an account picked, the purchase's line on that account's statement is recognized as this equipment (see below).
• How it comes off your taxes: Spread over years, with a Useful life (years) from 1 to 40, or Write off in full. Spread over years shows About … a year as you type. See How it's written off below.
• Serial number, warranty and more, folded away to start: the Vendor you bought it from (picked or added like an expense's), the Serial number (handy if it's lost or stolen), Warranty until, Started using it on and Notes.
• Receipt: drop a photo or PDF on the box, or click Choose File. It's stored privately, like an expense's receipt.

Started using it on is the day it went into use for the business (accountants say placed in service), when that's later than the day you bought it. Write-offs start from it; left blank, they start from Bought on. It can't be earlier than the day you bought it.

Click Add Equipment and the item's own page opens. Edit on that page reopens the dialog to change anything; Delete, at its bottom left, removes the item and its receipt.

From an expense or a statement#

A big purchase often starts as an expense, typed in or brought in from a statement. When an expense is $500 or more, under Equipment rental, Software, Materials or Other, and isn't billed to a client or a refund, the expense dialog asks Will you use this for more than a year? Click Track as Equipment:

• On a new expense, Add Equipment opens instead, filled in with the expense's description, amount, date, vendor and Paid With. Pick the category, check the rest, and save.
• On a saved expense, the expense becomes equipment in one step, keeping its date, amount, vendor, account and receipt, and the expense is removed. It's filed under Software if the expense was, otherwise Other, spread over that category's useful life; open it and click Edit to change any of that.
• An expense on an invoice, billed to a client, or a vendor payment (a check or ACH) can't become equipment. A vendor payment that bought equipment stays a payment: add the equipment on its own, paid with the same account.

When a statement comes in, from an upload or a connected bank, a charge that matches equipment you've recorded (the same amount, within three days of Bought on, on the account it was paid with, or naming its vendor when no account was picked) shows as Already recorded as equipment, with a link to it. It isn't added again as an expense. A charge you turned into equipment from its expense reads the same way. See Reviewing and approving.

How it's written off#

Each item comes off your taxable income one of two ways, as you pick in the dialog:

• Spread over years (straight-line depreciation): the cost is written off evenly, a month at a time, over its useful life. The month it went into use counts as a full month. A $3,000 computer over five years is $50 a month, $600 a year.
• Write off in full: the whole cost comes off in the month it went into use, so it counts in that year. On a US return, that's Section 179 expensing (the business chooses it, up to a yearly limit and no more than its taxable income) or bonus depreciation (the full cost of equipment acquired and put into service after January 19, 2025, unless the business elects out).

What's been written off so far is the item's accumulated depreciation; cost less that is its book value, shown as Worth on the Books. It's a figure for the books, not what the item would sell for. An item written off in full is worth nothing on the books from the start, though you still own it.

Try it: what comes off each calendar year, as the item's Write-off Schedule and your reports would show it.

• Calendar years: an item that goes into use in October writes off three months its first year, so a five-year life runs into a sixth calendar year.
• Every figure is worked out from the item each time you look, in whole cents, so the months always add up to the cost exactly. Change the cost, dates or useful life and every year follows.
• EscBooks records the method you pick and doesn't apply tax limits. It uses straight-line by month for every spread-out item. A US tax return depreciates over the item's MACRS class life (5 years for computers and vehicles, 7 for office furniture), with its own rates and first-year conventions, so a year's figure on the return can differ from EscBooks'; the total is the same.

Buildings and improvements#

A building you rent out, or that your business works from, is depreciated the same way, but it's kept on its property: under Building and Improvements on the property's page, not on Equipment (see Rental properties). Equipment says how many are on your properties and links to them. Five categories are for property, each with its rule's life:

• Residential rental building: 27.5 years. A house, condo or apartment building let to tenants.
• Commercial building: 39 years. Any other building: an office, a shop, a warehouse, your business's own premises.
• Building improvement: over the life of the building it's part of.
• Appliances: 5 years. A refrigerator, a washer, a stove.
• Rental furnishings: 7 years. Beds, sofas and tables in a furnished rental.

The building is usually added when you add the property, with Add the building to depreciation. A new roof, a water heater or furniture is added with Add Improvement on the property's page. Its write-off goes on that property's line of Schedule E (line 18).

Land and building. Land is never depreciated: it doesn't wear out. What you paid for a property is split between the two, under Of which, land, and only the building's share is written off. Your property tax bill or an appraisal gives the split. A $300,000 house with $60,000 of land is depreciated on $240,000. When it's sold, the land is part of what you gave up.

Mid-month. A building goes into use in the middle of its month, whatever the day: half a month's depreciation the first month, and half the month it's sold. That's the mid-month convention the tax rules use for buildings, so its life runs a month longer on the calendar. The $240,000 house above, in use from March 10, writes off $6,909.09 its first year: 9½ months (half of March, then April to December) of the 330 in 27.5 years.

A building is always spread over its life: it can't be written off in full the year you buy it.

Improvements and repairs. An improvement makes the property better, longer-lasting or fit for a new use: a new roof, a new furnace, an added room. It's added here as a Building improvement and depreciated. A repair keeps it as it was: fixing a leak, patching drywall, repainting between tenants. A repair is an expense, Repairs & maintenance on the property (Schedule E line 14), counted the year you pay it.

The Equipment page#

Across the top, three totals:

• What You Paid: the cost of everything still in use, with how many items that is.
• Worth on the Books: their book value today, cost less what's been written off.
• Write-offs in the current year (Write-offs in 2026, say): what comes off this year's taxable income, sold items included.

• The list shows each item's icon and category (and serial number), the day you bought it, what you paid, how it's written off (Over 5 years with the time left, or Written off in 2025), and what it's Worth now, with a bar for the share of its cost that's left.
• Newest first. Click the Item, Bought, Paid or Worth now heading to sort by it; on a phone, the Sort menu does the same.
• In use hides items sold, retired or lost. All, including sold shows them, marked how they went.

Click an item for its page:

• What You Paid, Worth on the Books, Written Off So Far and Time Left of its useful life.
• Value Over Time: for an item spread over years, its book value falling month by month to zero, with a line at today. Point at the chart to read any month.
• Write-off Schedule: each year's write-off and its worth at year end, with this year marked.
• Details: when you bought it and started using it, the vendor (a link to their page under Vendors, which lists the equipment bought from them), the account it was paid with, the serial number, the warranty with the days left, the receipt and your notes.

Sold, retired or lost#

Equipment/Sony A7 IV and lens

Sony A7 IV and lens

Camera & video·Over 5 yearsLearn about depreciation

Sold or RetiredEdit

What You Paid

$2,500.00

Mar 14, 2023

Worth on the Books

$666.67

As of today

Written Off So Far

$1,833.33

Time Left

1 yr 4 mo

Of 5 years

Value Over Time

It loses about $500.00 of book value a year, straight down to zero.

Write-off Schedule

What comes off each year's taxable income, and what it's worth on the books at year end.

YearWrite-offWorth at year end

2023$416.67$2,083.33

2024$500.00$1,583.33

2025$500.00$1,083.33

2026This year$500.00$583.33

2027$500.00$83.33

2028$83.33$0.00

Details

BoughtMar 14, 2023

VendorB&H Photo

Paid withBusiness Visa

Serial number4417-2290

WarrantyMar 14, 2025Expired

ReceiptView

Step 1 of 5PauseStart over

1. 1On the item's page, click Sold or Retired.
2. 2Pick what happened: Sold, Retired, or Lost or stolen. The date starts at today.
3. 3Enter what you sold it for. Before you save, it shows what it's worth on the books, and the gain or loss.
4. 4Click Save. Its write-off stops there, and a card shows the sale and the gain.
5. 5Changed your mind, or got it wrong? Back in Use undoes it.

1. On the item's page, click Sold or Retired.
2. Under What happened, pick Sold, Retired (you stopped using it, or threw it away) or Lost or stolen, and the Date. It can't be before the day you bought it.
3. For a sale, enter what it Sold for (0 if nothing). The dialog shows what it's worth on the books then, and the gain or loss.
4. Click Save.

What happens then:

• Its write-off stops. The month it went counts as a month of write-off, and nothing comes off after it. It's worth nothing on the books from that day.
• Sold for more than its book value, the difference is a gain, added to profit for that year. Sold for less, or retired or lost with book value left, the difference is a loss, taken off profit. Sold for exactly its book value, there's neither.
• A card on the item's page shows it: Sold for, Worth on the books then, and the gain or loss.
• Its page keeps everything, and its value chart ends on the day it went. On Equipment, it's under All, including sold.

Back in Use, on its page, undoes the sale or retirement: the write-off picks up where it was, as if it had never gone.

Equipment in your reports#

Buying equipment isn't a cost on its own: only its write-offs are, as they come off. That's how a big purchase is spread out, and it's the same on cash and accrual basis.

• The Profit & Loss lists Equipment write-offs under Costs, by month or quarter. A sale or retirement shows below the total costs as Gain or loss on equipment sold or retired, and counts in net profit. The quarterly and annual reports and the estimated tax figures count them the same way. See Reports.
• On Reports → Taxes, Equipment Write-offs lists each item's write-off for the year (In full, or a Year of 5), and Sold or Retired lists each sale with what it sold for, its book value and the gain or loss. Before You Meet Your Accountant says how many items were written off this year, or that none are recorded.
• The write-offs go on the tax form's depreciation line: line 20 of Form 1120 for a C corporation, line 14 of Form 1120-S for an S corporation, line 16a of Form 1065 for a partnership, and line 13 (Depreciation and section 179) of Schedule C for a sole proprietor. A gain or loss goes on Form 4797, then line 9 of Form 1120, line 4 of Form 1120-S or line 6 of Form 1065; a sole proprietor's isn't on Schedule C. Which form is yours is set in Tax structure.
• In the General Ledger, a purchase moves its cost from the account that paid (or Paid from: no account recorded) to Equipment, at cost, an asset. Each month's write-offs go to Depreciation and write-offs, an expense, and Accumulated depreciation, which sits against the equipment's cost. A sale brings what it sold for into Undeposited funds, and the difference to Gain or loss on equipment.
• On Month-End, equipment bought that month with no Paid With is listed under Paid with No Account Recorded. See Month-End.

The Year-End Summary#

At the bottom of Equipment, the Year-End Summary lists what comes off a year's taxes, item by item: each item written off that year (Written off in full, or a Year of 5-year depreciation) and anything sold or retired in it, with the Total. Pick the year at its top right.

CSV downloads it as a spreadsheet for your accountant: each item's category, the day it was bought and went into use, its cost, treatment and useful life, the year's write-off, its book value on December 31, and for anything that went, the date, what it sold for, its book value then and the gain or loss, with the serial number and vendor. Under Spreadsheets for Your Accountant, Reports → Taxes has an Equipment file with the same columns for every item you've recorded.