Small Business Tax Dictionary

Depreciation refers to the gradual reduction in value of assets such as furniture, equipment, or computers used in a home office. Over time, these assets wear out or become outdated, and their value decreases. Tax laws often allow businesses to deduct this decrease in value as an expense, spreading the cost of the asset over its useful life. Depreciation helps in recognizing the economic reality of asset wear and tear and provides a tax benefit to those maintaining a home office.