I understand a vehicle used for business is an asset. Do I place it under “Fixed assets, accumulated depreciation” or another title. I will be depreciating it under the simplified depreciation rules (for Australian small businesses) and want to know how to set this up and how this works to do it properly.
If your business trades through a company or trust (not necessary for a sole trader), the motor vehicle must be purchased by the business and registered in the name of the business to be regarded as a business asset. You can enter it under fixed assets and calculate depreciation under the small business rules (15% flat first year then 30% of the diminishing value for subsequent years). You should ensure the GST claimed on the motor vehicle is not part of the asset value and operating costs included in the purchase price such as registration and insurance are allocated to expenses.
I was interested to read this question and the answer… I am in Australia too and would like to know what a sole trader should do .i.e. how to account for it and the best place to record it in Manager?
Enable the Fixed Assets tab then create the motor vehicle as an asset. When you pay for the car under Spend Money or enter it through Journal Entries if it is financed, you allocate the payment to the Fixed Assets account and select the asset you created. Depreciation is entered by clicking the Accumulated Depreciation figure which will be nil for a new asset and creating a New Depreciation entry.
A sole trader can account for fixed assets in the same way as a company or trust. The sole trader is the owner of the business and also the owner of the motor vehicle purchased personally and can validly depreciate it under the business. The key point is that the entity that operates the business must also own the asset to depreciate it. It is incorrect for small business operators that trade through a company to buy assets personally and record them as company assets.
Great info. Before I add my new vehicle (as a sole trader) I want to know how the old vehicle should be cleared. My first vehicle was purchased out of my own pocket ($4000) and used for work and family (50/50). I listed it as an asset in manager ($4000). I recently traded it in for a new work car which is used 100% for business (as we purchased a second car for family use). I used half the original trade in value as a deposit on the new vehicle ($1,500) and the other half ($1,500) to go back in our family bank account (to help cover costs of the new family vehicle).
When I set the dispose of date of the fixed assed (car) it now shows up as $4000 in the suspense account under equity. How should I go about this so it the funds disperse correctly?
Did you dispose of the car by Editing the asset, ticking Disposed fixed asset and entering the Date of disposal?
Yes, I did as you stated but is showing up in suspense with the date I had originally acquired the vehicle. Is this right or am I missing something?