Is there a $250 printer on your balance sheet?

Closing the year for a water damage restoration company. The CPA asked for the fixed assets listed one by one. Under computers, carried as an asset, was a $250 printer.

It should not have been there. A $250 printer is an expense. You buy it, you write it off, you’re done.

Putting it on the balance sheet is not free. Every asset touches five or six accounts: the cost, the depreciation, the depreciation expense, the loan if there is one, the interest, and a gain or loss if you ever sell it. Each one has to be right every year until the thing is gone. For a printer.

My rule for small businesses: if it costs less than $2,500 each and you didn’t finance it, expense it.

The owners pushed back, and the pushback was good. They don’t buy one fan. They buy 50 fans at $400 each, on one invoice, in one transaction. A $20,000 invoice feels like an asset.

It still isn’t. The IRS rule most small businesses use here, the de minimis safe harbor, looks at each item, not the invoice total. A $400 fan is under $2,500. All 50 can be expensed. The business has to elect it on the tax return every year, so tell your CPA you want it.

To be fair, this one did not end with everyone agreeing. The owners wanted some depreciation on the books for lenders. That is a real reason. The CPA makes the final call on the return. The fans went into one group for tracking, and the owners tag them so they know what they own. Neither one needs 50 lines on a balance sheet.

What to do before year end:

1. List everything you bought this year that cost more than a few hundred dollars.
2. Mark the items over $2,500 each, and the items you financed. Those are your assets.
3. Everything else is an expense. Make sure your books agree.
4. Tag equipment you want to keep track of. A label and a spreadsheet beat a balance sheet for that.
5. Send the list to your CPA in January, with the de minimis election on it.

In QuickBooks Online, run the Balance Sheet and click the amount next to each fixed asset account. Sort the list by amount. Anything under $2,500 that you didn’t finance is probably an expense sitting in the wrong place.

If your balance sheet has a printer on it, start the 5-minute intake.