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-   -   Depreciation? (https://www.daycare.com/forum/showthread.php?t=25213)

newtodaycare22 01-06-2011 06:13 PM

Depreciation?
 
We put up a fence for daycare. MMK gives me the option of 15 year straight line depreciation, 15 year-150% declining, or other..

Can someone put this in English for me:D

Also, I bought a car (for daycare) for 6000. I only opened in August and my income is around 9000. With the other start up deductions...I'm obviously in the negative for income. Does that raise eyebrow for the IRS? Or no, since I'm a new business. Thanks!

TomCopeland 01-07-2011 08:12 AM

Fence
 
Fence - When depreciating an item you purchase for your business there are usually two different methods you can use to depreciate them. The first is called a straight line method. This means that you will get the same amount of depreciation deduction each year (over 15 years in the case of a fence). The second is called an accelerated method. This means that you get a large depreciation deduction in the first year and the amount then steadily declines over the life of the depreciation (again 15 years for a fence).

In general, it's best to use the accelerated method because it gets you deductions faster. You won't have to worry about paying anything back if you go out of business before the end of 15 years.

(Were you sure you really wanted to know this?)

Car - don't worry about claiming too many expenses in your first year that create a loss. This is typical. Buying a $6000 car doesn't necessary get you that much in deductions unless you used it more than 50% in your business.

newtodaycare22 01-07-2011 09:35 AM

Car
 
Quote:

Car - don't worry about claiming too many expenses in your first year that create a loss. This is typical. Buying a $6000 car doesn't necessary get you that much in deductions unless you used it more than 50% in your business.
Thanks for the advice about not claiming too much.

with the car...

Actually, we bought a large expedition just for daycare. We have 3 other cars but they cannot fit the car seats. So, its probably 99% daycare use, with a very rare errand.


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