Whenever you purchase something larger for your business such as furniture, equipment, a computer, or things like renovating or building a workspace, they are written off differently than other business expenses. Because this is something you will presumably use in your business for several years, you also dole out the amount write off over several years.
The amount you can write off for these large purchases is called a Capital Cost Allowance or CCA for short. The formula that determines your write-off is a bit complicated - which is why I built a calculator that works it out for you into the Canadian Small Biz Bookkeeping System. But, I still recommend that this calculator be used with accountant supervision.
Although a large purchase doesn’t get written off the same as other business expenses, you should still include it in your ledger because it does affect your cashflow.
On the monthly overview sheet under withdrawals, any of these large purchases will be recorded as an Asset Purchase. It’s located towards the bottom of the withdrawal categories dropdown.
The total you have spent for the month on asset purchases is in the reporting area up top in cell B15.
On the Profit & Loss Statement, asset purchases are shown on line 41, you’ll see that they are not included in the section with the operating expenses. But as they do have an impact on cashflow, they are included in the other deductions section.
There is nothing to set up on the Settings & Rules page for the CCA Calculator, you can go directly to the sheet which is near the end of the tabs along the bottom.
The first thing you will need to do is enter the tax year that you are currently working on up top in cell B3. That’s important to get the correct calculation.
Don’t touch the other two cells up top in B4 and B5. Those are your totals for what you can write off for this tax year, and they will update themselves automatically based on what’s entered in the purchase log below.
To enter an asset purchase in the calculator, you’ll log: