Use Case: How We Helped a Client Track Vehicle Depreciation and Personal Use Reimbursement

Client Profile:

A service-based business owner purchased a vehicle through the business but used it partially for personal reasons. They needed help keeping their books clean, accurate, and audit-ready — without overcomplicating the process.

The Problem

The client:

Purchased a $44,670 vehicle through the business
Was making monthly loan payments of $500 (split between principal and interest)
Used the vehicle 90% for business and 10% for personal
Wanted to track depreciation, loan liability, and owner reimbursement all within QuickBooks Online
Needed a system that aligned with IRS expectations and made tax filing straightforward

Most importantly, they wanted this handled accurately but efficiently, without needing to revisit messy manual work later.

Our Solution

We created a clean, scalable workflow inside QuickBooks that included:

1. Set Up Fixed Asset and Depreciation Tracking

Added Ford Bronco – Vehicles as a fixed asset
Created an Accumulated Depreciation – Vehicles contra account
Applied a 5-year depreciation schedule, matching IRS guidelines
Prepared recurring journal entries to automatically post depreciation monthly

2. Loan Payment Breakdown

Each $500 monthly payment was split:

Principal ($270) → Applied to Loan Payable (liability)
Interest ($230) → Posted to Interest Expense (P&L)

This ensured the loan balance stayed in sync with the lender's statements and interest was captured correctly for tax deductions.

3. Tracked Personal Use (10%) as Owner Reimbursement

Calculated that 10% of each payment ($50) was personal use
Booked that $50 to an Employee Reimbursement (Other Asset) account
Set up a recurring journal entry to record the amount owed each month
When the client transferred $50 back into the business account, we categorized the deposit to clear the reimbursement balance

This method preserved clean financials and protected the business from absorbing personal expenses.

The Result

Depreciation and loan tracking aligned with IRS standards
Financials reflected accurate loan balances, expenses, and equity
Client’s P&L was clean for tax filing — no mixed personal use
Monthly reimbursement was automated for a full year at a time

The client now has peace of mind and a replicable system for managing mixed-use assets — with minimal manual intervention.

Want a Clean Setup Like This?

Whether you're financing a business vehicle, investing in office equipment, or want your QuickBooks to reflect reality — ISAVSmart can build a system that works for you, not against you.

Book a free strategy session and let’s talk about simplifying your books.

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