Bookkeeping tips for personal property tax tracking
Many counties assess and charge what is known as personal property tax (PPT). PPT is a tax based on a percentage of the assessed value of items and equipment, used in your business, that does not form part of immovable property. (Vehicles are typically excluded from this type of tax.)
These tax filings can be a real headache if you have not prepared. Preparation is not difficult; it takes building a habit of quickly listing your personal property used in your business when you purchase. Know where you keep your list, i.e. Excel, Quickbooks, or ledger, and filing your PPT return will be simple.
There are typically three types of information required.
- Value of assets purchased for use in the business (excludes inventory or other items that are sold to customers)
- Amount of office supplies purchased
- Cost of leasing equipment
Value of items and assets
Make sure that you record large purchases such as equipment, computers, and furniture over $2,500.00 accurately as assets in your books. Include a detailed description of the items purchased as well as the number of items in the memo field. Keep receipts and purchase documents.
There are lots of items that you will not end up capitalizing and recording as assets because they are less than the IRS threshold of $2,500.00. However, these items still may need to be identified and included for personal property tax. For these items (smaller computer hardware, smaller furniture, etc.) We recommend creating a separate Expense account named “Assets under $2500” and classifying smaller dollar value items to this account.
A common question personal property tax filing forms ask for is average amounts spent monthly in office supplies. A simple method to calculate average office supply expenses is to view the most recent full 12 month Profit & Loss report clicking the Office Supplies or Office Expense account expanding the detailed transactions for your review. Make sure to exclude any office meals or food. Now add all applicable office supplies together for the 12 months then divide by 12.
Cost of leasing equipment
If you lease any equipment, you may be asked to report it on the filing. Keep track of leased items in their own expense account. Make sure you keep the lease agreement you will need to provide the specific terms of each lease.
In our experience, most county assessors’ offices and employees are happy to answer your questions and assist you in your filing. If you have questions, make sure you call your county assessor directly.
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