I am setting a Sole propriertorship. Do I list my vehiche as an asset and at what value. Also do I set up my computer as an asset? Should I depreciate these two items or have the accountand do it at year end.
Vehicle, generally no unless you have registered a business name and the car was purchased under it.
You computer could be set up as an asset, if it is used for the business. You would be best to speak to your accountant to provide the entry for it.
Hello Kullee,
If you are setting up a new business, it is okay to include anything you have provided they would be used in the running of your business. You can "guestimate" the value of your car or better still, consult a car dealership and determine its present used value or resale value or acceptable trade in value. Your computer can also be included in your asset account if used in the conduct of your business. In other words, plug in anything you've got provided they would be used for the business.
Depreciation can start AFTER you've done setting up your business and started using them.
Present value minus book value or scrap value divided by the number of years of their useful life (if using the straight line depreciation method) for a yearly depreciation or divide by 12 if you wanted to charge the depreciation expense on a monthly basis. You can select many methods of depreciation provided you should be consistent on their applications throughout the life of your business.
Hope this helps and have fun!
assistantadmin
You can't simply add a vehicle just because you use it in your business. The vehicle has to be purchased under the business name.
You can deduct a portion of the expenses used in the vehicle, or charge the company milage based on the number of KM's driven.
That is true for a corporation, it is NOT true for a sole proprietorship.
A sole proprietorship business is not distinct from its owner. Accordingly, anything owned by the proprietor can be described as an asset of the business. It is NOT necessary that a vehicle be registered in the name of the business.
It is true that you can deduct for tax purposes only a portion of expenses related to a vehicle that is sometimes used for personal purposes. This can NOT be done for a sole proprietorship by charging the company milage.
I would not waste time recording depreciation through the year.
So, If I charge the company mileage for the use of the vehichle, then I do not list it as an assest or charge for any gas or maintenance? Also what is an acceptable mileage charge if I can do that? Thanks
I repeat, a sole proprietor can NOT charge his business a mileage rate for use of his own vehicle.
Whether or not you show your vehicle as a business asset is YOUR decision - which you should make after consulting with your own professional accountant. There is no general rule.
Your vehicle expenses, including "capital cost allowance" for income tax purposes, must be prorated between business and personal use based on the mileage driven.
