In QuickBooks Online, after you set up your assets, you can record their depreciation. QuickBooks Online doesn't automatically depreciate fixed assets. Instead, you need to manually track depreciation using journal entries.
Note: Calculating asset depreciation is difficult. Your accountant knows the best methods. We recommend working with them to regularly review how you track depreciation. You should also review this article from the IRS.
Step 1: Set up a depreciation account
If you haven’t already, create an account to track depreciation.
- Go to Settings ⚙ and select Chart of Accounts.
- Select New.
- From the Account Type ▼ dropdown, select Other Expense.
- From the Detail Type ▼ dropdown, select Depreciation.
- Give the account a name, like "[Asset] depreciation]"
- Select Save and Close.
Step 2: Record the depreciation
Now you have accounts to track your assets and their depreciation. At the end of the year after you've talked to your accountant, create a journal entry to record the lost value.
- Select + New and then Journal Entry.
- On the first line, select the asset account you use to track the loan from the Account dropdown. Enter the depreciated amount in the Credits column.
- On the second line, select the Deprecation account you just created from the Account dropdown. Enter the same depreciated amount in the Debits column.
- Select Save.
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