It’s important that you track the assets of your business in your financial records. If your business has intellectual property, it should be also considered an asset and should be tracked. Many business owners do not track this. In today’s episode, Bernard Roesch explains why it’s important to track intellectual property and how to track it correctly within QuickBooks.
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Examples of Intellectual Property to Track
A few of the most common examples of intellectual property that have business value are patents and trademarks. Patents, including the costs incurred to get the patent or to buy the patent produce value to your business over time. This is something that needs to be tracked. Trademarks or premium domain names are also intellectual property assets that should be tracked.
Should Intellectual Property Be Amortized?
In some cases, it makes sense to amortize an intellectual property asset, so the expense is logged over the life of the asset. In some cases you can make the decision yourself based on the size of the asset value, while in other cases the situation is defined by the IRS. Be sure to follow amortization guidelines defined by the IRS to avoid tax issues later. In general, if the asset is going to provide value over multiple years, it should be amortized so that your accounting records are accurate.
How to Track Intellectual Property in QuickBooks
Tracking intellectual property in QuickBooks is very similar to tracking machinery or real estate. First, you record the cost for the intellectual property, such as a patent, as an asset. Then you amortize the cost over the life of the patent or other intellectual property. By recording the intellectual property asset in QuickBooks and amortizing this over the life of the asset, you accurately reflect the impact of this intellectual property on your finances.
Need Help Tracking assets in QuickBooks?
If you need help tracking intellectual property assets in QuickBooks or some other complex accounting scenario, contact Bernard today. He’s been able to help many businesses properly track complex accounting scenarios in their business.