Record Your Assets

If you're a small business owner, you probably know by now how important it is to efficiently manage your assets. This fact is most evident at tax time each year. Whether you're talking about cash or other physical assets, managing them doesn't have to be difficult.

The first rule to follow is to have good bookkeeping and accounting practices in place. In the long run doing this will save you both time and money. No matter how insignificant the amounts may seem, be sure to account for every penny that comes in and goes out. Even a few cents here and there can end up adding up to hundreds of dollars.

If you need to submit tax to the government a good accounting practice and asset management is extremely important. You may think something may be totally insignificant, but if you get audited, even years past of slight indiscretions can come back to haunt you.

Accounting is also essential when you require loans/grants for business expansion/development. Such loans require submission of detailed accounting books. Under these circumstances, possession of proper documentation and books with accurate records enables you to establish your credentials as a responsible member of the business community.

With time, most small business establishments acquire physical assets that they start overlooking when calculating their total asset. An asset is anything that holds some sort of monetary value or can be sold - irrespective of size or vintage. While we all know that the computer we work on is an asset, most of us fail to include items of furniture such as the chair we sit on and the desk we use. A considered glance with a critical eye would bring to light many more items that were not originally thought of as assets.

The concept of depreciation is important to understand when managing physical assets. For example a brand new car worth $18,000, depreciates in value as soon as it is driven off the lot. What we pay for a brand new item is certainly not the price we can expect to sell it five years later. For a car, factors such as mileage, wear and tear, and any accidents also play a role in the depreciation. While this rule of depreciation applies to all physical assets, property is an exception which may in fact appreciate in a few areas.

Office equipment and most other equipment purchased for a small business does follow the deprecation rule and must be taken into account when you are recording your assets. You may be feeling confused and overwhelmed at this point, but asset management can be fairly easy, given the proper tools.

There are several types of software programs available that can help you with your asset management and book keeping. Most software is fairly user friendly and comes with good documentation so you can set it up specifically for your business with ease. If you would rather hand your asset management and accounting over to someone else entirely, you may want to consider consulting a chartered accountant.

The main point to remember that asset management in small businesses is just as important as it is in large ones. Be sure to take this into consideration and document everything. You may end up paying a high price if you don't.

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