For tax purposes, equipment is another term for an asset. An asset is something you purchase for your business that will last more than a year and costs $500 or more. You will want to keep records of what date you purchased and started using it, whether you purchased it new or whether it was a gift or something you inherited, and when you dispose of it and if you sell it, for how much. Assets are generally depreciated over a period of years. The number of years it gets depreciated will depend on what type of equipment it is – a laptop is 5 years, a table saw is 7 years, computer software is 3 years.
If the item in question does not meet both criteria: costs $500 or more, lasts more than a year – then it is a supply, and you can add it to the total of supplies purchased for the year and expense it.