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Level 1

Asset vs Expense Treatment for Small Tools/Equipment


I run a contsrtuction business that does primarily concrete work....   I was wondering how other contractors handle small tool/equipment purchases.  

When it comes to small tool purchases, how should these be treated?  

Example: Purchased a Milwaukee Circular Saw for $320.  Can i just expense this purchase? Or do I have to create an asset account and a depreciation schedule to capture the expense?

I anticipate that this particualr tool will last more than a year...  However, i do not want to be running depreciation schedules on 50+ different small tool accounts.   

The other option would be to take a 179 on all of these accounts..



2 Comments 2
Level 15

Asset vs Expense Treatment for Small Tools/Equipment

All of the regulations changed with the Dec 2017 tax law update. It helps to meet with your own CPA to cover this type of regulation and how it applies to your own business and your own activities. If you are going to do your own Bookkeeping and manage the financial data, unless you also intend to get up to speed on every tax rule detail, meet with a CPA once in a while to get proper guidance.

I teach this in my class as, "Let's Maximize the tax rules to your benefit."
Level 15

Asset vs Expense Treatment for Small Tools/Equipment

Just expense hand tools, the tax laws are not that drastically changed, you still have at least the de minimus amount of 2500 where you can expense things costing less than that.


though the concept of talking to a tax accountant is important and should be used

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