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Furniture Fixtures and Equipment
Understanding furniture, fixtures, and equipment
Furniture, Fixtures, and Equipment (FF&E) is the movable property companies use in business operations. FF&E can be office furniture, fixtures that won’t damage a building structure when removed, and equipment such as computers needed to conduct day-to-day operations. The term FF&E is used in different service industries for various purposes but generally talks about the same items. Accountants refer to FF&E as long-term tangible assets (assets that last more than a year, which you can physically touch) that they value on a company's balance sheet and use for tax purposes. FF&E purchasing or procurement refers to when corporations and public agencies hire interior designers, general contractors, or architects to furnish their office or place of business.
Why is FF&E important?
If you're a business owner or a commercial property landlord, FF&E is an important concept for accounting and tax purposes, as items included in FF&E have depreciation calculated in a different way than the property itself and therefore also have an impact on a business's book value. For example, the IRS considers computing equipment to have a useful lifespan of five years while an office building that houses the computers would be depreciated according to a 39-year schedule. FF&E deductions can help boost your qualified business expense each year, in turn lowering your income tax.
Examples of FF&E
While it wouldn't be practical to list everything that could possibly be considered FF&E on a business's balance sheet (there is a wide range of items that could be included), here are some of the most common examples:
- Furniture: Tables, chairs, lamps, bookcases, sofas, and more.
- Electronic equipment: Computers are a very common example, as is stereo equipment, point-of-sale (POS) terminals, speakers, and other electronics. Security systems are often considered to be FF&E as well.
- Decorative items: Art, photographs, or other objects on the walls.
- Lighting: Lamps and lighting fixtures (even if they are technically attached to the building).
- Other business equipment that isn't a product for sale: For example, in a fitness center, gym equipment such as weights and cardio machines would be included. In a lending business, an object such as a currency counter could be considered FF&E. In a dry-cleaning business, rotating clothing racks are an asset type likely included in FF&E.
As a general rule, items considered in FF&E calculations are tangible assets that:
- Are easy to remove from the building.
- Have a useful life of one year or more.
- Aren't products that a business would typically sell.
In the next section, we'll look at a few examples of things that are generally not included in FF&E, but most things that qualify meet these three basic criteria.
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