When you started your business, you may have bought computers, office furniture, or other equipment necessary for running your company. But you probably haven’t given much thought to these business assets since.
When you are running a business, you think about your inventory, your expenses, payroll, cost of production and facilities. One often overlooked aspect of business is the tracking of fixed assets. Because, let’s face it: Asset tracking can be rather tedious, boring, and confusing. We are here to help you, in this article, find the best way and system to make your business' assets run seamlessly.
You want to start by Identifying Your Assets. Knowing what assets you have, as well as their value, is key. Make a list of any and all:
- Office furniture
- Computers
- Equipment
- Special technology
- Company vehicles
- Fixtures
- Buildings you own
- Inventory
Once you have a list, Determine The Asset's Value. This isn’t what you initially paid for them because assets depreciate. To determine the market value of these physical assets, look for similar products (about the same age) for sale in your area (eBay is a good place to start). This isn’t an exact science but will give you a ballpark figure of what they’re worth, which will be useful later if you want to take out financing.
After you’ve assigned value to your assets, Record Them on Your Balance Sheet. Most accounting software will walk you through the process, or you can get help from a professional accountant. Our AssetRemix system will even let you record it in our software next to each asset.
Maintain Your IT Assets Regularly, software should be updated, repair schedules in place. You can figure out the lifecycle of your assets to decide if an asset needs to be repaired or replaced depending on the cost. Having the right it asset management system will help set reminders to keep IT running smoothly.
Because these assets are key to the operation of your business, you need to Insure Your Assets. Business property insurance will cover replacements should any equipment be stolen or ruined due to acts of nature (flood, fire, etc.). And if you use business vehicles, you need auto insurance. Yes, these are added costs when your budget is already tight, but consider how you’d fare without insurance if something went wrong.
Understand an Investment in an Asset is a Business Expense, so it will reduce your taxable income. However, rather than claiming the full, say, $50,000 you paid for a large piece of equipment in one year on your taxes, you can claim part of that for several years, depreciating its value over time. This way, you get a similar tax break for years, rather than a huge one and then no benefit after that.
Leverage Your Assets in the Valuation of Your Business. The value of your business comes from several factors, including your revenues, your trademarks or patents, cash and assets. Asset-based valuation takes into consideration all the assets you have, both tangible and intangible, such as intellectual property. This valuation will help potential investors or buyers determine how much to offer in exchange for equity or a fair offer to buy it.
If you decide to sell off any of your assets, Sell the Assets the Right Way. The value of the asset will have depreciated since you bought it, but get it appraised from an appropriate source before putting the asset up for sell.
No matter the size of your business, AdminRemix is always happy to help you with your asset management needs!