Why you should always track assets as they are acquired
Assets are a large portion of any business’s structure, however, an asset can quickly become an expense if not tracked and maintained properly. A key resource of small businesses and a large reflection of its net worth, assets must be recorded and reconciled appropriately for numerous reasons.
Land, buildings, furniture, and equipment are all examples of “fixed assets”. These assets are recorded at their original cost (purchase, installation, and any property repairs or improvements required for use). Maintaining an accurate tracking system using a software, such as assetGEEK, will allow a business owner the opportunity to keep tabs on the money currently sitting in their assets along with the loss of its value during the fiscal year.
The acquisition of new assets by a company increases their net worth, but may also yield an increase in taxes which will be owed at the end of the year to the IRS. Accurate reporting on your taxes is crucial to the IRS in the event of an audit. The same goes for any sales or salvages of equipment. This must be updated in your ledger regularly.
The easiest way to track assets is at the time you acquire them. Adding a new fixed asset’s information into the tracking system at the time of purchase, before it ever reaches the business, is recommended. This ensures an asset won’t disappear before its presence has been acknowledged. It is also important to remember when any asset undergoes a repair, when warranty or parts are purchased, or when furniture items or other assets are cleaned, this cost gets added to the asset’s overall value in the tracker.
Maintaining a quality tracking system for fixed assets is incredibly important for any business. This will help ensure the quality of the reporting as well as the monetary value of the company is being tracked appropriately.