What expense category do chairs come under?

Buying office chairs for your business? You're probably wondering where they fit in your expense reports. Let's break down how chairs are classified in your financial records and why it matters.

Classifying office chair expenses

When it comes to categorizing office chairs, there are two main options:

• Fixed assets: If the chairs cost more than your company's capitalization limit and have a useful life of over a year, they're considered fixed assets. You'll record them on your balance sheet under "Office Furniture and Equipment" and depreciate them over time.
• Expenses: If the chairs cost less than the capitalization limit, you can expense them immediately. They'll appear on your income statement under "Office Expenses" or a similar category.

Examples of office chair expenses

Knowing where your chairs fit helps keep your books accurate and your financial reporting compliant. Here are some scenarios to illustrate how chairs might be categorized:

• High-end ergonomic chairs costing $800 each may be classified as fixed assets due to their higher cost and long lifespan.
• Bulk purchase of standard chairs at $50 each might be expensed immediately if the total cost falls below your capitalization limit.
• Specialty chairs like drafting stools could be categorized differently based on their specific use and cost.

For example, if you buy ten chairs for $500 total and your capitalization limit is $2,500, you'd expense the purchase right away.

Tax implications of office chair expenses

Proper classification can impact your taxes:

• Section 179 deduction: You may be able to deduct the full cost of chairs in the year you purchase them, even if they're fixed assets.
• Depreciation: If you don't use Section 179, fixed assets like chairs are typically depreciated over seven years using the Modified Accelerated Cost Recovery System (MACRS).

Keeping clear records of your purchases and their classifications ensures compliance and helps maximize your tax benefits. Consulting with a tax professional can help you navigate these options and choose what's best for your business.

Let Ramp automate your expense process

Managing expenses like office chairs doesn't have to be a hassle. With Ramp, you can automate the categorization, tracking, and management of these purchases. We help you streamline your expense process so you can focus on growing your business instead of juggling receipts.