Business

Taxes: Depreciation Categories

When buying assets it is important to know the best way to purchase and depreciate to take advantage of tax loopholes. Capital expenses usually include the following assets: buildings, cell phones, computers and software, copyrights and patents, equipment, improvements to business property, inventory, office furnishings and decorations, small tools and equipment, vehicles and window coverings. Below you will find a more detailed account of these depreciation categories.

3 year property:

  • plastics
  • metal fabrication
  • glass

 

5 year property:

  • cars
  • trucks
  • small planes
  • trailers
  • computers
  • peripherals
  • copiers
  • calculators
  • manufacturing equipment (for apparel)
  • construction activity assets
  • R&D equipment

 

7 year property:

  • office furniture
  • manufacturing equipment
  • fixtures
  • oil
  • gas
  • mining assets
  • agricultural structures
  • personal property

Commercial buildings can be depreciated over 39 years while residential rental real estate can only be depreciated over 27.5 years. Expenses incurred for improvements to sidewalks, roads, drainage facilities, fences and landscaping are depreciated over 20 years.

To learn more about Notable Bookkeeping’s tax planning, preparation and research services call us today at 201-937-3428.

Lean Wednesday Tip: Mitigating High Growth Challenges

“When you have a high growth atmosphere there are sure to be inefficiencies that start creeping up into operational processes. Effective leaders ensure value is maintained and/or optimized instead of lost, they create efficient workflows and make decisions by fact as a way to manage the increased challenges brought on by high growth, and don’t stray away from the profitable target customer.”

E.O.W. (End of the Week) Notable Tip: Bulk Up Savings with More Cash Back

Happy Friday!

I hope you’ve had a great week!

Today, I want to talk about ebates.com and how this site can help your business save more money. Ebates is a shopping portal website that lets you earn cash back on your purchases. You can choose to either receive your cash via check or Paypal. It’s a no brainer! It takes about 2 weeks to receive the money which then could be used to supplement your savings. “A business that saves money is always prepared for the unexpected.”

I hope you found this useful and as always, “Success is continuous improvement.”

Lean Wednesday Tip: Optimize productivity with Visual Tasks (Kanban)

“By using visual task boards (Kanban) that portray clear time-frames and expectations coupled with the prioritization of tasks including preventative plans for mitigating the unexpected is a great way to optimize productivity. It is important that work-in-progress is kept low to reduce over-production. You can also encourage employees to collaborate on tasks as well.”

When to Automate a Process

Many Managers and leaders ask this question, “When do I know its time to automate a Process?” The simplest answer is that automation of a process is critical when the well-being of your employees is being impaired, too much time is spent on manual input and putting out fires; and less time is dedicated to strategic planning and achieving strategic goals.

Leaders must constantly measure process performance as this includes, process cycle time, lead times, and process costs coupled with benchmark comparisons to truly understand how they fare with their competitors. For example, say you wanted to automate your Accounts Payable function. You would first create a process map to identify inefficiencies in the process, test and implement new controls, track and analyze Key Measures of Performance (cost per invoice, process cost, process cycle time, days to resolve a problem, et cetera) and compare data to your competitors. If you realize that the cost per invoice and process cycle time is significantly higher than your competitors it is wise to consider automation software.

However, before integrating software to automate the process you must compare the total costs and see if new and tested controls or alternative low cost methods can reduce costs and cycle time without the integration.

A process in dire need of automation can be detected by increase in poor quality, delivery and productivity. A process can not run smoothly if any of these process efficiency characteristics (quality, delivery and productivity) is not meeting business and customer requirements.

E.O.W (End of the Week) Notable Tip: Aligning product success metrics with customer priorities and strategic goals

Happy Friday!

I hope you had a great week. This week’s Notable Tip is focused on the development of valuable and critical product KPI metrics. If you are not measuring and monitoring the most important metrics of your product’s performance progress then you are missing valuable insights that can help you optimize your product. Below I end this post with a short message on how to ensure product success with well-developed measures of performance.

As always, “Success is continuous improvement.”

“Properly designed measures of performance are aligned with strategic goals of a company as well as with its customers’ priorities. They should be to the point, clearly written, focused and measure what is of value to the customer (product/service attributes).”

Lean Wednesday Tip: Performance Measures

“When you have insufficient information about a product, process or service, you are unable to control it. Ergo, when a process cannot be controlled, the organization is at the mercy of chance. KPIs must be aligned with the strategic goals of a company as well as with its customers priorities.”

Lean Wednesday Tip: Issuing Section 1244 Stock

“Small C Corporations benefit from issuing Section 1244 Stock as it offers shareholders better tax treatment if they lose money on the disposition of their C corporation stock. It is best to create a written corporate resolution that specifically states that the shares are Section 1244 stock. Also, make sure to authorize more shares than you’ll sell.”

IT Asset Management Checklist

It is important that you are periodically auditing and logging critical IT assets for the purpose of minimizing security, conduct and financial risks. Below I have noted the most important assets that should be properly logged and have auditable documentation.

IT ASSET MANAGEMENT CHECKLIST:

  1. Hardware and Software
    • computer user, UPC, location, model number, et cetera
  2. Network and communications infrastructure, servers and apps
  3. Alarm systems
  4. Telephone circuits
  5. Vendors and Service Providers
  6. Licenses
  7. Purchase and disposal info
  8. Computer and Laptop software upgrades
  9. List of all apps in laptops or computers for each employee including authorization and security information.
  10. Cloud Data backup hardware (e.g.; external USB drive)

By using this checklist the next time you conduct an IT Asset audit you’ll be able to identify vulnerabilities and exploits that were not previously known to you. For example, let’s say your policy states that there should be 10 laptops kept in the supply room at all times but when you conduct an audit you find only 8 and employees have been careless with the laptop request form. The laptops also have not been entered into the tracking system making matters worse as now you have to dig through invoices to identify the two missing laptop model numbers and SKUs.

An IT Asset Policy is not effective if it is not enforced regularly. Employees must be reminded of them everyday and trained periodically.