Depreciation is the accounting method for spreading the cost of a long-lived asset — a kiln, a mixer, a laser cutter — across the years it is in service, instead of expensing the whole purchase in the year you bought it. The idea is that the equipment loses value as it wears out, and each year's share of that loss is a real cost of running your business.
For makers, depreciation matters for two reasons. At tax time it is a legitimate deduction that smooths a large equipment purchase over its useful life. For planning, a depreciation schedule tells you roughly when a machine will be "used up" on paper, which is a useful prompt to start budgeting for its replacement.
Ardent Seller tracks equipment depreciation using the straight-line method — the same fixed amount each year over the asset's useful life — based on the acquisition cost, useful life, residual value, and the date the asset was placed in service. Tax rules vary, so the schedule is a planning and record-keeping aid; confirm the right treatment for your situation with a tax professional.
Related terms
Schedule C
An IRS tax form (Schedule C - Profit or Loss from Business) used by sole proprietors. Ardent Seller can categorize expenses and generate reports aligned with Schedule C line items.
Tax Category
An IRS Schedule C expense or income category used to classify transactions for tax reporting. Helps organize your financial data for end-of-year tax preparation.