When you first start your own business, calculating depreciation can seem impossibly complex – but getting it right has real business benefits. Find out more about the ins and outs of depreciation.
Depreciation is what happens when business assets lose value over time.
It’s an often-forgotten cost of doing business – but it shouldn’t be. Here’s why depreciation is so important:
The ins and outs of depreciation
Usually, only long-term or fixed assets can be depreciated, while consumable products aren’t included.
You also need to estimate the item’s lifespan and choose a method to calculate how its value declines over time.
Common methods include:
Accounting for depreciation in your business
When you’re just starting out, calculating depreciation can seem overwhelmingly complex. But, because it can lower your costs and help you track your business value, it’s worth making the effort.
If you’re not sure where to start, get help from our expert accounting team now.
The following content was originally published by Xero in this article. We have updated some of it for our readers.