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I am an incorporated freelance user experience (UX) designer with an LLC, and my state requires a personal property return with a balance sheet every year. I'm using cash accounting for my business and haven't taken any accounting classes, though I have read the Accounting chapter of The 10-Day MBA.

Here's a simplified case showing what I have so far for my Intangible Assets:

  • Adobe Creative Cloud 12-month rental: $600 (charged $50 per month; 1-year commitment which renews every August)
  • Month-to-month software rental which lasted for 7 months in 2013 before I canceled it: $70
  • Purchased software (download, not CD): $300
  • Domain name for my company's site: $10 (my web host charges me every 2 years; it is up for renewal this year)
  • Training course materials purchased in 2012 (digital download): $400
  • Design books (physical copies): $100
  • Total: $1480

This isn't everything but covers every case that might need to be on my balance sheet.

So, several questions:

  • Should rented software such as Adobe Creative Cloud be added into intangible assets?

  • Should rented software, such as Adobe Creative Cloud, be considered accounts payable or go somewhere else in the Liabilities side of the balance sheet?

  • Is there anything else in my list above which shouldn't be on the balance sheet - or which should be elsewhere on it?

Edit: This is for the state of Maryland. The specific balance sheet I need to fill out is here.

  • What state requires that? Can you post a link to the requirement? – littleadv Mar 5 '14 at 2:53
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I was only able to find Maryland form 1 to fit your question, so I'll assume you're referring to this form.

Note the requirement:

Generally all tangible personal property owned, leased, consigned or used by the business and located within the State of Maryland on January 1, 201 must be reported.

Software license (whether time limited or not, i.e.: what you consider as rental vs purchase) is not tangible property, same goes to the license for the course materials. Note, with digital media - you don't own the content, you merely paid for the license to use it.

Design books may be reportable as personal tangible property, and from your list that's the only thing I think should be reported.

However, having never stepped a foot in Maryland and having never seen (or even heard of) this ridiculous form before, I'd suggest you verify my humble opinion with a tax adviser (EA/CPA) licensed in the State of Maryland to confirm my understanding of this form.

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