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This topic will go over features of depreciation in RTO Pro. Click here to see What is Depreciation?

 

RTO Pro can depreciate Tax and Book depreciation. That just means you can do 2 different types of depreciation on your inventory, typically tax would be what you report to the IRS, book would be for your own internal purposes. Most companies will only do Tax depreciation. Some companies will use book depreciation with a straight line depreciation method for accounting purposes for calculating manager bonuses for example.

 

Depreciation is done by Inventory Agent in RTO Pro. You can have as many Inventory Agents as you want, or you can have just 1. You assign inventory to an Inventory Agent when you receive it, each Inventory Agent can be set up to use a different depreciation type for Tax and Book depreciation. Click here for info on setting up Agents. You can also have multiple agents to split inventory up into groups, but use the special "All Agents" for depreciation and only run 1 depreciation for all inventory, no matter what agent it is in, more info in this topic.

 

There are a lot of different depreciation types you can use, the ones that RTO Pro supports can be found in this help topic. All depreciation types used in RTO Pro follow IRS guidelines for that  depreciation type, links to IRS documents on depreciation can also be found in the help topic linked earlier in this line. Each Inventory Agent in RTO Pro can use 1 depreciation type for Tax purposes and 1 for Book purposes.

 

You should discuss depreciation with an accountant before you set up depreciation in RTO Pro, there are a lot of variables that need to be considered, a few of these are listed below, only you or your accountant can answer these questions.

 

1. Do I need to use multiple depreciation types for different inventory groups, or need to group inventory into different agents for some other reason?

2. Do I need to use Tax and Book depreciation?

3. What depreciation type should I use? The IRS will typically want you to use a specific type based on the type of inventory it is and your business type.

4. What month/year do I need to start depreciating my inventory? This is typically the month when you open your business or get inventory and start renting it out.

5. Have I been depreciating my inventory before I started using RTO Pro or outside of RTO Pro? If your store is new and you have never done depreciation before than it is pretty straight forward to set up. If you have been doing depreciation on your inventory already, in other software or your accountant was doing depreciation for you there are a few choices you have to make before you can let RTO Pro do depreciation for you. You can either correct the RBV values of all inventory you previously depreciated, or split your old and new inventory into 2 agents and let RTO Pro depreciate your new items and keep using your old depreciation method to keep depreciating your old items until they are fully depreciated. See the examples in this help topic for more details.

 

 

Click the button below for other help topics on depreciation.