Managing Your Assets

If you own and run a small business you probably know how important it is to properly manage your assets, especially when tax season rolls around. Managing your assets can be fairly easy, no matter what type of assets you're talking about. This includes cash as an asset and physical assets as well.

Healthy habits with regards to book keeping and accounting practices will always save you time and money in the long run. When dealing with your cash accounts and assets, you need to keep exact track of income and spending - irrespective of how small or insignificant the dollar value may be. Every cent added up over a period of time can make a vast sum.

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.

Managing and properly reporting your physical assets needs to take several things into account. One of these is depreciation. When we talk about cars, the concept of depreciation becomes very clear. When you buy a car brand new at $15,000 you can't expect to sell it five years later for the exact same price. As soon as car is driven off the lot it deprecates in value. Mileage, wear and tear, and any accidents also play a role in the depreciation of the car. The same goes for almost anything else you may be considering an asset. Property is an exception to this rule and in many areas goes up in value.

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.

The mature business market offers numerous software programs that can assist you with your asset management and book keeping. While most of these are heavily documented and are very user friendly, some assistance from a software expert can get you customized solutions too. However, when choosing to seek external assistance for your asset management and accounting, then the right choice would be a qualified CPA.

The bottom line is that for small businesses, asset management is very important and must be taken seriously. Not only can you benefit from properly documenting your assets, but there can be serious repercussions if you don't.

John Hivern is the chief editor for FTP Assets, the web's premier resource for information about Asset Management & Protection, For more articles on Asset Management & Protection visit: www.ftpasset.com/articles
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