What expense category is Office Furniture?

Office furniture is a broad term encompassing any movable furniture used in an office setting to support business operations. This includes items like desks, chairs, tables, and storage units, all of which contribute to a functional and comfortable workspace.   

Office Furniture in Accounting

In accounting, office furniture is typically categorized as a fixed asset, also known as a tangible asset. This means it's a long-term asset that's expected to be used in the business for more than one year.   

Proper classification of office furniture is crucial for several reasons:

• Financial Reporting: Accurate categorization ensures that your financial statements, such as the balance sheet, accurately reflect the value of your assets.   
• Tax Purposes: The classification determines how you'll deduct the cost of the furniture for tax purposes, either through depreciation or expensing.   

Is Office Furniture an Asset?

Yes, office furniture is considered a capital asset, meaning it's not immediately deductible as an expense in the year of purchase. Instead, its cost is spread out over its useful life through depreciation.   

Capitalizing an expense means recording it as an asset on the balance sheet and then gradually deducting its cost over time through depreciation. Expensing an item means deducting the full cost in the year it was incurred.   

Office Furniture Expense Categories

Office furniture expenses can be divided into the following business expense categories based on the type of furniture:

• Seating: Chairs, office chairs, stools, etc.   
• Workspaces: Desks, workstations, cubicles, tables, etc.   
• Storage: Filing cabinets, shelves, storage units, etc.   
• Common Area Furniture: Sofas, chairs, tables for reception areas, break rooms, etc.   

How to Account for Office Furniture?

The most common method for accounting for office furniture is depreciation. This involves deducting a portion of the furniture's cost each year over its useful life, which is typically seven years for office furniture according to IRS guidelines.   

The IRS provides detailed rules and regulations for depreciating assets, including office furniture. The most common method used for office furniture is the Modified Accelerated Cost Recovery System (MACRS), which allows for a larger deduction in the early years of the asset's life.   

Section 179 deduction allows businesses to expense the full cost of qualifying office furniture up to a certain limit in the year it's placed in service. This can provide a significant tax benefit, especially for small businesses.   

How Fyle Can Help

Fyle is an AI-powered expense management platform that streamlines expense tracking, coding, and compliance for businesses. Fyle can automate the categorization of office furniture expenses based on your chart of accounts, ensuring accurate record-keeping and compliance with IRS regulations.