What Is Amortization In QuickBooks & How To Use It?

If you are keen to learn what is amortization in QuickBooks and how to use it, then this post can surely help. In general terms, amortization is the process of quantifying gradual losses in the values of your company’s intangible assets. It can be patents on inventions, licenses, trademarks, and goodwill in the marketplace. There are several advantages of recognizing the amortization in QuickBooks. In this post, we will discuss what is amortization in QuickBooks and how you can utilize it for the betterment of your business. What Is Amortization In QuickBooks? If you run a business, most of your company’s assets lose value over time, be it tangible or intangible. However, you can quantify those loses in QuickBooks, which has a significant impact on your business accounting operations. The process of quantifying the gradual losses in the values of your intangible assets such as trademarks, licenses, or various others. The term amortization is also used in the context of a loan (e.g. Mortage). Amortization refers to distributing the payments in different installments, including both principal and interest dollars until the amount is paid in full. How To Use Amortization In QuickBooks? Now that you know what is amortization in QuickBooks, you need to understand how it is used in the application. It is important to recognize the importance of amortization in QuickBooks as it can help you in reducing taxable income for the business in question by showing the decrease in the asset’s book value. On the other hand, QuickBooks has a feature known as loan manager, which creates an amortization schedule for the life of the loan. You can track how the payments are decomposed into the principle interest and escrow. Furthermore, you can set up regular and additional payments or compare and contrast loan options with what-if scenarios. To use the loan manager feature for amortization, you need to create an account for the loan. Also, you need to set up individual accounts for interest expense and escrow, if applicable, in addition to setting up the lender as a vendor. Follow the below-given steps: